Local Government Bill

HC Deb 12 January 1999 vol 323 cc124-210

[Relevant documents: The Eleventh Report from the Environment, Transport and Regional Affairs Committee, Session 1997–98, on the Implementation of the Best Value Framework (HC 705-I) and the Government's Response thereto (Cm 4082).]

Order for Second Reading read.

Madam Speaker

I should inform the House that I have selected the amendment in the name of the right hon. Member for Yeovil (Mr. Ashdown).

4.35 pm

The Minister for Local Government and Housing (Ms Hilary Armstrong)

I beg to move, That the Bill be now read a Second time.

The Bill provides for the replacement of crude, universal council tax capping with new reserve powers to protect the council tax payer and new arrangements for achieving best value in the development and delivery of local authority services. It provides a crucial role for the new National Assembly in Wales. The Under-Secretary of State for Wales, my hon. Friend the Member for Cardiff, Central (Mr. Jones) will say something about that later.

Modern councils put people first. They are at their best when leading their local communities, working with partners to develop and achieve a vision for their area, striving for continuous improvement in the delivery of local services, involving and responding to local people and building effective partnerships with local businesses and the local community.

The Bill is the first step in the wider modernisation of local government set out in our White Paper last year. Our proposals to transform the political management and ethical framework of councils will be published soon in a draft Bill and other measures will follow.

The Bill concentrates on the bread-and-butter issues: raising the quality of public services to improve the quality of people's lives; creating a level playing field to ensure real and fair competition in service provision and the efficiency gains that competition brings; and recognising the immense contribution made by public servants in the public, private and voluntary sectors.

The Government's belief in modern public services comes from our traditional values of community and solidarity. We believe that, by the strength of our common endeavour, we can achieve more than we achieve alone.

That is why communities work together, through their local councils, to ensure the provision of education for children, homes for the homeless, care for the elderly and vulnerable, regeneration for run-down neighbourhoods, crime prevention and community safety; and to plan better public transport. That contrasts with the open hostility of the Conservative party to the very idea of community. The Government embrace the values of community; the Conservatives scorn them. That is why the hon. Member for Rutland and Melton (Mr. Duncan), a Front-Bench health spokesman for the Conservative party, described community as "atavistic, backward-looking, irrational".

Mr. Robert Jackson (Wantage)

As the Minister is so very keen on the importance of local communities and local self-government, will she give an assurance that it will soon be possible for the local community in Oxfordshire to decide the level of council tax?

Ms Armstrong

I shall not be tempted to breach the rules of the consultation. I enjoyed receiving the hon. Gentleman and his colleagues from the local authority this morning, when I made clear the boundaries within which we work at the moment. The Bill provides slightly different boundaries, and I hope that he will be interested in hearing about them later in my speech.

It is because we believe so strongly in the power of community and the potential of modern public services that we have zero tolerance of inefficiency, mismanagement and waste. It is because the Conservatives care so little for community that they have zero tolerance of public services. That is why they oppose the Bill. People expect a bigger say and a better deal from the services that their councils provide, with more transparency and involvement in the way in which decisions are made about the cost, quality and delivery of local services.

Dr. Lynne Jones (Birmingham, Selly Oak)

I agree with my hon. Friend about the need for greater transparency, but how will the capping of council tax benefits help to ensure greater transparency and accountability?

Ms Armstrong

As I will say later, the Bill proposes a sharing of responsibility between national and local taxpayers on decisions that are made locally.

People expect public services to be delivered in the most effective and efficient way, meeting their expectations on cost and quality. They are more concerned with how services are delivered than with who delivers them. They are fed up with the old ideologies which pitted public sector against private. What matters to them, and what matters to us, is what works.

Modern public services are the foundation stone for modernising local government. The best councils recognise their success and seek continuous improvement. The worst councils should be changing now, or face intervention by Government. The average cannot afford to be content with mediocrity.

Best value is far from a soft option, with four disciplines driving standards even higher. First, the public will set the standard and see the outcome. Secondly, standards and performance will be independently audited. Thirdly, tough inspection regimes will make sure that all councils are up to scratch. Fourthly, if they are not up to scratch, the Government will intervene to protect our public services and the council tax payer.

Best value is based on four Cs: challenge whether a particular service is necessary or desirable; consultation with local people about the standards that they expect; comparison with the quality and cost achieved by other similar service providers; and competition, real and fair, to achieve the maximum value for money. When the Conservatives were in Government, they had their own version of the four Cs—capping, compulsion and central control.

The Bill seeks to define more closely the role of Government, away from centralisation to regulation. The Bill will shift power out of Whitehall to the town hall, but will make sure that individual citizens are protected as consumers and taxpayers. For too long, public service provision has been an ideological battleground between public and private sectors.

Mr. Bernard Jenkin (North Essex)

Will the Minister give way?

Ms Armstrong

The result was compulsory competitive tendering—which I am sure that the hon. Gentleman will now defend.

Mr. Jenkin

Is the Minister talking about the same Bill that we are considering in the House today? Does she accept that 27 new powers for the Secretary of State are specified in the Bill? The Bill, therefore, has a great deal to do with central control, including the continuation of capping by her Government.

Ms Armstrong

The Bill contains immense new powers for local people. Far from being a centralising measure, the Bill proposes to change the relationship between central and local government, and spells that out for the first time—something that the previous Government were not prepared to do.

Compulsory competitive tendering delivered some efficiencies, but at a cost. Too often, CCT meant the cheapest, rather than the most cost-effective. Contracts became straitjackets. Public services were delivered to minimal standards at minimal cost by minimalist providers.

Mr. John Bercow (Buckingham)

I am most grateful to the Minister for giving way relatively early in her speech. On the subject of new powers, will she tell the House in what circumstances she would envisage using the new power that the Bill will confer on her and her right hon. and hon. Friends to cap local authorities below their standard spending assessment—which is, after all, the Government's own assessment of spending need?

Ms Armstrong

The hon. Gentleman obviously does not know that the provisions made by the Conservative Government gave exactly that ability. I shall describe the powers in the Bill later in my speech, and I am sure that he is happy to wait until then. Now, I intend to talk about CCT, even though the hon. Gentleman does not want me to remind the House or the people of the devastation that the Conservative Government were prepared to inflict on local government and local services through CCT.

Clause 18 will repeal CCT at the beginning of next year, as we promised in our election manifesto. In its place, the Bill introduces a duty of best value on all local authorities, including the Greater London Authority and its functional bodies when they are established.

Mr. Paul Burstow (Sutton and Cheam)

Does the Minister accept that the new powers to issue guidance and, by regulation, to make changes mean that future Secretaries of State will be able to reintroduce the CCT regime without further recourse to primary legislation, which has to be passed by Parliament?

Ms Armstrong

No, I do not accept that. We are introducing a regime that is entirely different from compulsory competitive tendering—one that is far more flexible and more focused on local people and their ambitions. Best value is a duty to deliver services to clear standards of cost and quality by the most effective, economic and efficient means available. Competition will be a key management tool for delivering best value and driving up standards, but, unlike CCT, it will be fair competition and it will be a means to an end, rather than the end in itself. The hon. Gentleman should reflect on that explanation in order to get the real answer to his question.

Best value will raise standards of public services in line with public expectations. The service standards of all local authorities will be brought up to those of the top 25 per cent. As a result, an annual 2 per cent. efficiency target should be well within the reach of all local authorities. If services are poor or inefficient, it will be clear where accountability lies. Local people should not have to put up with failing public services and the Government will not hesitate to intervene to prevent the worst excesses of inefficiency and waste.

Most of local government shares our belief in modern public services. More than 100 local authorities across party boundaries are involved in best value pilot projects and more than 250 are involved in various best value initiatives. The Local Government Association has worked with us to promote service improvement and has set up its own improvement agency. Those bodies recognise the new challenges that best value poses for local councils: expectation of higher standards; a push for continuous improvement; and pressure for greater accountability.

Clause 3 places a duty on each authority to consult the people whom it serves. The duty of best value is owed not to central Government, but to the citizen. I want there to be growing engagement between the public and their local councils. The citizens charter went some way toward telling local people what they could expect from public services, but best value will mean local people telling local councils exactly what they expect from public services.

Mr. Dafydd Wigley (Caernarfon)

Given the Minister's emphasis on the needs of people in their own locality, which vary from area to area, can she confirm that the order-making mechanism contained in the Bill gives considerable flexibility to enable the National Assembly for Wales to deliver slightly different policies that are in line with the needs of local communities?

Ms Armstrong

Yes, I can confirm that, and the Under-Secretary of State for Wales, my hon. Friend the Member for Cardiff, Central, who will wind up the debate, will reaffirm it. The Bill is the first to devolve powers to the National Assembly and I welcome the right hon. Member for Caernarfon (Mr. Wigley) to the Chamber to celebrate that event.

Mr. Burstow

Will the hon. Lady give way?

Ms Armstrong

No. I want to continue. I am prepared to take interventions, but the hon. Gentleman has already intervened once.

There is a national interest, too, in the level at which service standards are set. Therefore, clause 4 allows the Secretary of State, or the National Assembly for Wales, to specify performance indicators and standards in certain circumstances, accompanied by locally determined performance indicators and targets.

Clause 5 requires local authorities to carry out fundamental performance reviews of all their functions to consider new ways to deliver services and set targets to show continuous improvement.

Through the best value performance plan, a local authority will set out its targets and plans for the public and report on performance. Real local accountability will come when people can compare what a council says that it will achieve with what it actually achieves.

That brings me to audit and inspection. Clause 10 provides the Audit Commission with inspection powers to complement the work of the existing inspectorates. All functions will be subject to rigorous scrutiny. An inspectorate forum will take forward arrangements for joint monitoring of the delivery of best value, particularly where local priorities cross traditional boundaries.

We will ensure that collaboration between existing and new inspectorates works properly. For example, we will extend the role of the Housing Corporation to enable it to provide consultancy and support services to assist the Audit Commission to carry out its new duties under best value.

Police authorities will be subject to the duty of best value, in line with their statutory function to maintain an efficient and effective police force. Policing has a unique tripartite structure, within which chief constables also have a role in delivering best value. Therefore, I propose to table amendments in Committee to reflect the role of chief constables under best value and to define more clearly the respective roles of Her Majesty's inspectorate of constabulary and the Audit Commission. I also propose to table a further amendment in Committee to deal with the funding of inspections.

In most cases where the auditor or inspector recommends action, I expect the local authority to act speedily on the recommendations. In the first instance, councils will be expected to put their own house in order and will have the opportunity so to do. However, there must be a line in the sand. Clause 13 sets out the enforcement powers that the Secretary of State or the National Assembly in Wales may use in the cases of the worst failures. We will develop a protocol with local government to ensure that there is a clear understanding about when those might be used. Indeed, we are already discussing that in partnership with local government.

Sir Paul Beresford (Mole Valley)

Will the hon. Lady give us some idea of the time span for the procedure that would end in confiscation? I do not necessarily have an argument with it, but I am concerned that, by the time that it happens, the dust will lie upon the problem that inspired the reaction in the first place.

Ms Armstrong

I am interested to hear the hon. Gentleman say that. The Conservative Government never used their most severe powers. The reality is that, in the initial period, a performance plan, on which local people will be able regularly to give their views, will have to be published every year. Of course, the auditor will make an annual report and trigger inspections if necessary and inspectors will, if necessary, report to the Secretary of State. At this stage, I do not want to go into precise timetables. We want to discuss those details in Committee and to produce guidance. They are a part of our discussions with the wider partners with whom we are developing the programme and we are learning from the pilot projects.

Innovation and reform are at the heart of modern public services, so clauses 14 to 16 contain powers to facilitate best value. We expect local authorities to look at a wide range of options for service delivery, focusing on innovation and new ways of working, and testing the boundaries of service delivery and best practice.

Where it will improve the standards of public service, we want local authorities to be able to enter into new forms of partnership. Instead of the sterile debates of the past, which paid more attention to the means of service delivery than to the quality of services delivered, we want to promote public-private partnerships—a third way for public services.

Also, best value will encourage local authorities to work in partnership with other public bodies—pooling budgets, making better use of assets and ending some of the false boundaries between different deliverers of public service. Some of what was revealed in the statement earlier this afternoon by my right hon. Friend the Secretary of State for Health shows the importance of enabling local authorities and health authorities to work together much more closely. At the same time, however, best value will encourage partnerships with private enterprise and voluntary organisations to secure new expertise and greater investment, and to promote innovation. The scope of those enabling powers will have to be carefully drawn. Therefore, clause 15 sets out the detailed process for using them, including further scrutiny by Parliament.

Compulsory competitive tendering has tied public services in too much red tape for far too long. Modern public services require flexible procurement practices, and it is high time that the legislative framework was amended to reflect that. That is not just the view of the Government: it is also the view of both the Trades Union Congress and the Confederation of British Industry.

In a recent open letter to the Prime Minister, the CBI stated: The major task ahead is to break the CCT mindset… Best value should be the driver and therefore the centrepiece of local government reform…building innovative partnerships between councils and business and establishing the link between service improvements and better treatment of staff.

In November last year, I was pleased to receive the first-ever joint delegation from the public and private employers and trade unions working in local government. Those social partners came to press for the best value provisions that are contained in this Bill.

Local authorities need confidence in their partners, and private companies need to be able to demonstrate that they are good employers. Clause 17 gives the Secretary of State and the National Assembly for Wales the power to amend the categories of "non-commercial matters" that authorities may take into account in selecting tenderers and awarding contracts.

The House may remember the widespread support for the private Member's Bill sponsored in the previous Session by my hon. Friend the Member for Bethnal Green and Bow (Ms King)—whom I am pleased to see in the Chamber this afternoon—which sought to make a similar amendment. That Bill was killed off by objections from the right hon. Member for Bromley and Chislehurst (Mr. Forth). However, the Government are today introducing those measures in this Bill. Public procurement policy has moved on from the sterile ideology of the 1980s, even if the Conservative party has not.

We shall consult widely on the use of those new powers. We believe that it is essential that our approach enjoys the support of partners in the public and private sectors. Our manifesto promised to replace crude and universal capping with new reserve powers to limit excessive council tax rises. The Bill delivers on that pledge as part of a wider package of measures aimed at improving local financial accountability. We hope that the powers will be used rarely, but we will step in to protect council tax payers, should that prove necessary. We are not a tax-and-spend Government and we do not want tax-and-spend councils.

Mr. Burstow

While I understand that the Minister and the Government do not want high-spending councils, surely that must be a matter for the local electorate. Capping, whether it be crude and universal capping of the sort that the previous Government imposed or the so-called sophisticated capping to be introduced by the Bill, blurs accountability and denies the electorate the opportunity properly to judge their council.

Ms Armstrong

I suspect that the hon. Gentleman does not understand what tax-and-spend councils mean. Such councils throw money at a problem rather than trying to sort it out and achieve the best outcome. We want to ensure that councils tackle their problems in that way. We are determined that the national interest, about which I shall speak later, is taken into account in the settlement; that has never been possible. It is not honest to say that national Government have no interest in what local government does. We have to work as partners. The Bill spells out the framework within which that partnership will work.

Mr. Patrick McLoughlin (West Derbyshire)

In the Minister's opinion, have the Government, during their term of office, capped only authorities that have been irresponsible spenders?

Ms Armstrong

We are at present using the legislation introduced by the previous Government. It does not give me the flexibility or the terms that the Bill will give me.

We are not a tax-and-spend Government. Councils know that, if they budget responsibly, they will not be affected, but if they fail to deliver responsible budgets or if their efficiency and economy fall short of the standard that we expect, we will use these powers to protect the council tax payer.

The new powers contained in clause 23 and schedule 1 are much more flexible than the current capping powers. They will enable the Secretary of State in England or the National Assembly in Wales to look back over several years in deciding whether a council's budget is excessive and allow factors such as demonstrable support for spending plans among the local electorate and the delivery of best value to be taken into account.

The Bill provides for new and more flexible ways to regulate budget levels and allows for a more managed approach by councils that have to reduce their budgets if the Secretary of State or the Assembly determines that a council's budget requirement is excessive. As we announced in the White Paper and at the time of the local government settlement, we are implementing a scheme under existing powers that will limit the amount of subsidy paid to local authorities which increase council taxes above a guideline that we shall set annually. Individual benefit recipients will not be affected. Where a council does not exceed the guideline, it will receive subsidy as now. If a council increases its council tax above the guideline, it will have to make a contribution to the council tax benefit costs arising from that increase.

The technical provision in clause 24 provides that, where the authority making increases above the guideline is a major precepting authority, such as an English county council, it will make the contributions to the billing authority. In order to ensure fairness, no local area where a higher-than-average proportion of council tax is met from benefit will be affected more than the average.

The Government believe that it is right that, where councils make increases above the guideline, costs should fall in whole or in part locally rather than nationally. The scheme is currently out to consultation and we shall report back to the House on it at the time of the settlement debate.

Mr. David Curry (Skipton and Ripon)

Despite the rules on averaging, does not the scheme mean that a local authority with a large number of properties in, say, band A or B—presumably housing poorer people—will none the less pay more than an authority in, say, Surrey or North Yorkshire as a contribution to council tax spending?

Ms Armstrong

The Bill allows us to bring down to the average. However, it would be difficult to ask people who are below the average to make a larger contribution to take them up to the average. At present, the national taxpayer picks up the benefit bill. We believe that there should be some local accountability regarding the effect of local decisions. The burden should not be passed completely to the national taxpayer.

Mr. Curry

rose—

Ms Armstrong

I have already answered the right hon. Gentleman's question.

The scheme, as I have described it, is out to consultation. It is not part of the Bill, but part of the consultation that is currently taking place. The results of that consultation will come before the House in a regulation that hon. Members must debate. The details are part of the consultation process, not part of the legislation. Existing legislation enables us to do that.

Mr. Curry

Is it not true, none the less, that the relative burden on council tax payers in Liverpool will be greater than that on council tax payers in Surrey or North Yorkshire?

Ms Armstrong

I have already answered that question. If they do not make the average in Surrey, they will not contribute up to the average. If they have well above the average in Liverpool, council tax payers will not be asked to contribute the amount that they could have been asked to pay if we had gone for the whole lot. We have sought to be fair by ruling that no council will pay above the average.

Dr. Lynne Jones

My hon. Friend refers to accountability, but surely local governments are accountable through the ballot box. That is where accountability lies. The waters have been muddied in the past 20 years or so by the complexities of local government finance and the fact that so much money is raised centrally rather than locally. These measures will make local government finance even more complex. The right hon. Member for Skipton and Ripon (Mr. Curry) pointed out that the poor will subsidise the poorest. That is surely not a system that a Labour Government should be comfortable about introducing.

Ms Armstrong

My hon. Friend seems to forget that, at present, the national taxpayer pays for local council policies through council tax benefit subsidies. That does not help local accountability. We want to share accountability between local and national taxpayers, and that is what this measure will ensure. I remind the House that no council needs to see council tax benefit subsidy limitations if it sets its council tax at a level below the guideline. Taken together, the changes will contribute to a further strengthening of local accountability.

Mr. Adrian Sanders (Torbay)

Consultation will occur after councils have set their budgets. That is hardly fair.

Ms Armstrong

I am not sure that the hon. Gentleman is correct. However, the consultation is outside this process and the budgets do not have to be set until later. The councils know what is going on, and they will listen to our discussions not just in the Chamber, but in Committee.

With central Government no longer telling councils what they may spend, local people will have more impact on the decisions taken by local councils regarding the taxes that they raise, the spending that they commit and the public services that they deliver.

The Bill modernises local government to enable the delivery of modern public services. Alongside our other local government reforms, it puts local people in the driving seat for reform, giving them a bigger say and a better deal from local councils.

The Bill defines the national interest in the workings of local government. It is in the national interest that service standards are high; that best value is gained for every penny of public money spent in the public or private sector; that local government, like central Government, is prudent and responsible; and that the council tax payer is protected from the wasteful and the profligate.

The Conservatives and the Liberal Democrats do not understand that national interest. The Tories maintain their hostility to community and their support for capping, compulsion and central control. The Liberal Democrats seem not to care how high council tax gets or what the public get for their money.

The Bill honours our commitments to end crude, universal council tax capping and outdated compulsory competitive tendering. In their place, we shall strengthen local financial accountability, provide new protections for the council tax payer and introduce a new duty of best value to raise the standards of public service and modernise public procurement.

The Bill has been broadly welcomed by public and private sector alike, by employers and employees, by local government across the parties and by trade unions. For too long, our public services have been marred by conflict and confrontation. Today, the Bill marks a new spirit of consensus and co-operation in the development of public services. I know that the Opposition do not like that. It is a third way, designed to reform public services, build new partnerships between the public and private sectors, encourage innovation and new forms of public service and protect the council tax payer.

This is a modernising Bill for a modern public service and I commend it to the House.

5.12 pm

Mr. Bernard Jenkin (North Essex)

If the Bill promotes light, truth and harmony in local government, consensus, partnership and a better community spirit, we will be right behind it. The Minister knows full well that a sense of community is at the heart of modern Conservatism. If that raises a wry smile on the Government Benches, it is simply because the hon. Lady's ludicrous posturing at the Dispatch Box makes her look ridiculous. What was interesting about her performance was the way in which it made Labour Members sizzle with enthusiasm. The Labour party obviously has a sense of unity of purpose, consensus and partnership about the Bill, which confers 27 powers on the Secretary of State to exercise over local government.

Another interesting point about the Minister's performance was that it was characterised by the tell-tale signs that emerge when the legislative cart has been put before the policy horse. First, she announced amendments to the Bill as she moved Second Reading. The pilot schemes for best value are still in progress, so the Government are still formulating the policy on which we are being asked to legislate. Secondly, the hon. Lady spoke about what the Bill does not contain rather what it does contain, and she made little mention of the 27 new powers. There is also a tell-tale clause of the kind that appears in a Bill when there is a muddle; I refer to clause 14, which deals with the use of secondary legislative powers to amend primary legislation. That suggests that the Government do not now know what changes need to be made, and will think of them later.

If ever there was an enabling Bill, this is it. Support for an enabling Bill is always a little deceptive because people are supporting the actions that they hope the Secretary of State will take with the new powers, not the way in which the powers will actually be used. The test of support for the Bill will be when it is used.

I am reminded of the section in "Alice in Wonderland"—the Hansard editors will have to be lenient with me—where, according to my recollection, having run the race that nobody wins, Alice asks what it all means. The Queen of Hearts replies, "Words mean what you want them to mean". That just about sums up this Bill. It includes policies that are still subject to consultation.

Mr. Andrew F. Bennett (Denton and Reddish)

Given that the hon. Gentleman is deploring the Henry VIII provisions in the Bill, will he tell the House how many such provisions were introduced during the Conservative Administrations and how many of those he voted against?

Mr. Jenkin

That is a good question. We should be extremely careful—indeed, it should be drawn to the House's attention—when such powers are being used. They should be used as little as possible. We will test the purpose behind the powers, and the Government's intention of using them, as the Bill goes through the House—as is our job as the Opposition, and as was, no doubt, the hon. Gentleman's job when he was in opposition.

When the Deputy Prime Minister published the White Paper in July, we welcomed the fact that the Government were taking the opportunity to look afresh at the range of policies affecting the way in which local government is run. We said that we would judge the Government's proposals according to whether they would increase accountability, transparency and fairness in local government. As my right hon. Friend the Leader of the Opposition said, We must think about how we can once more make local democracy vital and effective.

We did not neglect local government when in office. I am proud of the Local Government Planning and Land Act 1980, which introduced compulsory competitive tendering for council services. That was the start of the revolution in the delivery of council services that "best value" seeks to continue. Leading councils pioneered the idea of the enabling council. Hundreds of councils succeeded in transforming the quality of their services at reduced cost, and in so doing, transformed their culture on behalf of the communities that they serve. We applaud their success. Despite Labour's bitter opposition at the time, we welcome its acceptance that competition and transparency have a vital role in the delivery of council services.

Dr. Alan Whitehead (Southampton, Test)

How many local authorities took advantage of powers under the 1980 Act prior to the Local Government Act 1988, which made competitive tendering compulsory rather than voluntary?

Mr. Jenkin

Obviously, powers under the 1980 Act were not enough. That is why I am proud of the later legislation that extended CCT.

We also introduced the Education Reform Act 1988, which transferred powers from local education authorities to schools and pupils, the Environmental Protection Act 1990, which empowered local authorities to take action on the environment, and the Community Care (Direct Payments) Act 1996, which transferred powers from local authorities, giving independence and choice to millions of dependent elderly people.

We are, however, prepared to evaluate our record in local government; we acknowledge that we need to make a fresh start. As a party, we are seeking to change our whole attitude to local government. The House should ask some fundamental questions: what do we want local councils to do in the next century; what should be their functions, powers and responsibilities; and how can we make them both more independent of the hand of central Government and more accountable to their communities? [Interruption.] I make no apology for surprising some hon. Members. That is in the interests of local government.

Our objective should be to improve the effectiveness, relevance, accountability and attractiveness of local government. Our guiding principle should be that decisions in our society are taken as closely as possible to the people who are affected. We should aim to strip away the controls that fetter councils—including, eventually, capping.

Mr. Robert Key (Salisbury)

Conservative Members who have been Local Government Ministers warmly welcome and endorse what my hon. Friend has just said and look forward to the development of his argument. Will he bear in mind the fact that forward-looking Conservative-controlled local authorities such as Wiltshire county council are being held back by the inability of the Government to do joined-up local government, let alone joined-up government? The new Government's inability to manage their reforms—for example, in health, with the problems of bed-blocking that result—is making life extremely difficult for local authorities.

Mr. Jenkin

I wholeheartedly agree with my hon. Friend.

Many may have thought that new Labour meant it when it said at the general election that it supported decentralisation. However, the Bill takes local councils in precisely the opposite direction. From the noises made by new Labour in opposition, voters and even some Members of Parliament understood that new Labour opposed central Government rules on competitive tendering and spending levels.

Behind the smokescreen of best value, the Bill replaces the clear and simple discipline of competitive tendering with a highly ambiguous and convoluted regime of central Government powers that are potentially far more draconian. Even the powers to be exercised by the Secretary of State are entirely at his discretion. Instead of abolishing capping in the name of financial freedom for local councils, the Bill replaces fair and open capping powers with a system of capping that is secretive and retrospective, and gives yet more powers to the Secretary of State.

Ms Armstrong

Is the hon. Gentleman telling us that the Conservative party has changed its position and is now against capping?

Mr. Jenkin

Our position is perfectly clear. We believe that capping should be overt and clear. In the long run, in an ideal world, we should be able to reform local government so that capping is no longer necessary. At present it seems difficult to imagine—as the hon. Lady did when she was in opposition—circumstances in which capping can just be dumped.

If any hon. Members still believe that the Bill is a decentralising measure, they had better disabuse themselves of that notion. There are no provisions in the Bill to produce accountability. There is nothing that puts powers back into the hands of local communities. If she disagrees, the hon. Lady may rise and tell the House why.

Ms Armstrong

I have already made my speech.

Mr. Jenkin

That makes the point.

The abolition of CCT and capping are old Labour commitments that new Labour was never able to escape. The Bill bolsters the position of the Secretary of State by granting him a host of new powers to intervene and by imposing a swathe of new obligations on councils.

Far from the decentralisation that many may have expected, the Bill represents a further lurch towards the nationalisation of local councils, presented in a package designed to be all things to all men. The Secretary of State spent more than a year trying to reconcile what councils and trade unions wanted with the realities of office. What he has produced is not as it is intended to seem. In that respect, it is, perhaps, another manifestation of the third way.

CCT has been a success. By the end of the 1970s, most local authority services had become little more than a union-dominated racket to provide jobs for the boys. CCT has produced huge savings across the range of local government services to which it applies, resulting in an average overall reduction of 7 per cent. in service costs. Moreover, contrary to the scaremongering of Labour's vested interests, it has done so while improving the quality of services offered to communities: in many cases, services have improved beyond recognition, both from the point of view of those who depend on them and from the point of view of the employees who work in them.

Mr. Graham Stringer (Manchester, Blackley)

I would be the last to deny that CCT has resulted in some minor improvements in transparency and has clarified local authorities' thinking. Does the hon. Gentleman agree, however, that the vast majority of the savings attributed to CCT have been caused by driving down the wages and working conditions of some of the poorest people employed in local authorities—in many cases black people living in the inner cities, and women? The legislation has been racist and sexist, and its effect has been to impoverish people.

Mr. Jenkin

Is the hon. Gentleman implying that every local authority subcontractor is somehow racist and sexist, and drives people into the dirt? Is he seriously suggesting that a refuse collector employed by a private company today earns less than a refuse collector in 1979? If so, he really is trying to pull the wool over our eyes. What betrays the hon. Gentleman is his grudging admission that there was at least something good about compulsory competitive tendering. Coming from him, that is good enough for me. That betrays how Labour's opposition to CCT was bogus from the start. CCT has been a success.

Ms Oona King (Bethnal Green and Bow)

Will the hon. Gentleman give way?

Mr. Jenkin

If the hon. Lady will allow me, I shall make some progress.

The Labour manifesto said: We reject the dogmatic view that services must be privatised to be of high quality. We agree with that. Competitive tendering was never intended, per se, to force privatisation; it merely requires the direct labour force to compete and to be compared with the private sector. Local authorities are not forced to accept the lowest bid; they are merely obliged to have good reasons for not doing so. There is nothing dogmatic in that.

If best value is to work, it will have to replicate those processes. It is a question of sound financial management and respect for taxpayers' money and for the fact that it should be spent carefully, rather than frittered away. New Labour's opposition to competitive tendering reeks of dogma—the outdated socialist dogma which says that only the state can provide public services, and that profit is to be reviled. New Labour now claims to accept that those ideas belong in the past, but many in the rank and file of the Labour party and its union paymasters still cling fondly to their collectivist doctrines.

Ms Armstrong

How does the hon. Gentleman reconcile what he has just said with the CBI's statement that—

Mr. Edward Leigh (Gainsborough)

They are a bunch of socialists.

Ms Armstrong

I see. Perhaps I should not be intervening.

The CBI says that CCT has really had its day. It says: Best value must retain the competitive principles of CCT, but remove its fundamentally adversarial nature and replace this with consultation and shared objectives. Does the hon. Gentleman not agree with that?

Mr. Jenkin

No, I do not. I did not agree with the CBI when, for example, it supported the closed shop. It was wrong about that, and even the Labour party has accepted that. The Institute of Directors, in a survey of its members, found that 49 per cent. of them do not think that replacing CCT with best value will improve services for local council tax payers, and only 33 per cent. think that it will.

It is difficult, however, to argue about the merits of best value on the basis of a Bill that contains virtually nothing other than a raft of extra powers for the Government. It is on that basis that we should discuss the legislation.

Mrs. Teresa Gorman (Billericay)

Does my hon. Friend agree with the leader of the Conservative members on Basildon council—with whom I have consulted on the Bill this afternoon—who describes the Bill as going backwards into the future? Basically, all the consultation flummery and best value is simply a smokescreen behind which Labour councils will be able to take back control of the services that the Conservative Government so successfully privatised.

Mr. Jenkin

That is certainly one of the dangers of the Bill. But it all depends on how the Secretary of State chooses to exercise his powers. Of course, CCT was not perfect—

Mr. Eric Illsley (Barnsley, Central)

rose—

Mr. Jenkin

I should make progress. I owe the hon. Member for Bethnal Green and Bow (Ms King) an intervention at some stage, but I shall give way to the hon. Gentleman.

Mr. Illsley

Does the hon. Gentleman agree with the hon. Member for Billericay (Mrs. Gorman) who has just referred to the successful privatisation of local government services? Does that not contradict his earlier statement that CCT was not about the privatisation of services but was to achieve better value, or whatever?

Mr. Jenkin

Apart from the Bank of England—and even that example might be questionable—can the hon. Gentleman give an example of a business which has been successfully nationalised? Of course CCT was not perfect: the sustained policy of non-co-operation pursued by Labour councils meant that tight regulations had to be introduced to ensure compliance with the spirit of competitive tendering, and we acknowledge that even that failed with the worst Labour councils. One of the great ironies of politics is that the pride which Labour councils express in their direct labour organisations is matched only by their reluctance to expose the performance of those organisations to competition.

The unions hope that best value will reward that reluctance; they hate the discipline of CCT, and hope that best value will protect them from the rigour of competition, at the expense of council tax payers. Is that the intention of the Bill, as my hon. Friend the Member for Billericay (Mrs. Gorman) suggested? Alternatively, is best value, like the lager, intended to reach the parts that CCT could not reach?

Dr. Lynne Jones

The hon. Gentleman talks about best value as though it were not supported by his Conservative colleagues. Do not Conservative local authorities support the move to best value?

Mr. Jenkin

Many authorities will support best value if it is implemented in the way that they expect, but the Bill provides no certainty about how best value will be implemented.

Compulsory competitive tendering provides a concrete framework to ensure competitive local council services. The White Paper stated that best value reviews will be required to embrace fair competition as a means of securing efficient and effective services. I have just made the same point to the hon. Member for Birmingham, Selly Oak (Dr. Jones). The Bill gives no indication of how competition will be provided for. The White Paper offers a range of options, including benchmarking; contracting out all, or part, of a service; joint ventures; competitive tendering of various kinds; or even full privatisation—yes, that, too, is in best value. However, there is virtually nothing about the discipline of competition in the Bill, and nothing to suggest how it will be applied.

What are we to believe? Will the Secretary of State bring the full rigour of competition to bear on recalcitrant, inefficient councils, or will the Bill achieve what many councils hope and allow them to escape the discipline of competition? The Bill provides no discipline for the Secretary of State in the exercise of his powers, and that is its fundamental problem.

The Bill creates no obligation for the Secretary of State to treat similar councils in a similar way. He can discriminate in favour of some councils and against others. The Bill is an invitation to cronyism of the worst kind, which is already endemic in Labour councils. Today, The Birmingham Post reported: Union leaders were secretly recorded urging a Labour councillor to secure work for party activists in a 'jobs for the boys' row in a Midland council. The Labour councillor who blew the whistle deserves to be congratulated on showing such courage, but what he revealed was deeply disturbing. He said: They were saying co-operate in finding jobs for these people or all hell will break loose and the whole service will be in dispute. It was an arrangement they have had for years in the past and the Labour group knows about it but doesn't do anything. That is Labour in local government and, if best value is to succeed, that is what Labour must confront.

The Conservatives want what best value sets out to achieve: to get the benefits of competition and to increase local discretion. Good councils are already pursuing best value, but the Bill will dilute competition and hugely increase central control, making local councils more answerable than ever to Whitehall. The emphasis on flexibility, which we hear so much about, encourages the expectation that councils will be able to take their own decisions, but, in reality, the final word on flexibility will rest with the Secretary of State. The onus will be solely on him to challenge the corruption in the party that he represents in Parliament.

As with the proposals for best value, the Government's changes to the capping regime face both ways. Capping started as a way of protecting ratepayers from the excesses of Labour-run councils in places such as Lambeth and Liverpool, but no one can feel easy about the way in which it has grown. Councils need more freedom of manoeuvre in their financial affairs, but, equally, the council tax payer needs protection from excessive local tax demands. As the Government now recognise, central Government have an interest in how much is spent by local councils. Perhaps that new-found caution is behind the Deputy Prime Minister's rapprochement with the Chancellor of the Exchequer. Rate capping is not being abolished; it is being modernised.

Taken in isolation from any review of accountability or structures, the measures in the Bill move in the wrong direction. The refusal to publish provisional capping limits, the use of following-year capping, the taking into account of previous years' budgets and the potential clawback of central Government funds for council tax benefit do nothing to address the fundamental problem.

As the Local Government Association points out, the proposed council tax benefit subsidy limitation will hit the poorest areas hardest. In its briefing, the association says: the guideline increases could be seen as a direct substitute for crude and universal capping.

Ms Sally Keeble (Northampton, North)

The capping measure is, in principle, very similar to measures introduced by the hon. Gentleman's party in government to limit the amount of housing benefit that was paid, and to make councils pay an element of that benefit when private rent levels exceeded market value.

Mr. Jenkin

This is a novel concept in regard to accountability in politics. Whatever the former Opposition's policies were, when they become a Government they justify what they did previously on the basis of what the new Opposition did when they were in government. I do not think that the British people will be very impressed by that—and councillors up and down the land will not be very impressed by it, either.

Local people have too small a stake in the budget decisions made by their local councils. Councils are not properly accountable to the communities that they serve, and the Bill represents a missed opportunity to deal with that.

If we are to have capping, the system needs to be clear. Universal capping may have been crude, but it was transparent, and councils knew where they stood. Under the Government's proposals, councils and officials will be confused and uncertain, and local communities will be even more so. Crude and universal capping—the target of the Labour manifesto—is to be replaced by capping that is secretive and retrospective. The Bill makes capping personal: it will be a matter of choice for Ministers, and I assure the hon. Member for Northampton, North (Ms Keeble) that they will find it no easier to exercise their powers on that basis than to exercise them on the present basis.

Once again, the Government have achieved the worst of both worlds, which is the essence of what we are discovering their "third way" to be. They have produced more apparent latitude for councils to tax and spend, with none of the reforms that are necessary to ensure that such freedoms are exercised in a responsible manner. The fact is that the Government have no real interest in improving accountability, because they know that the true cost of Labour in local government is very high. The most outrageous council taxes are charged by Labour; the worst-indebted councils are Labour. Labour councillors have been gaoled, investigated by police or subject to allegations in Doncaster, Wakefield—[HON. MEMBERS: "Westminster."] I hear the name of one local authority from Labour Members, but I can mention a few more.

In Hull, Labour does not trust its local members to select candidates. Then there is Slough, and Birmingham—where a Labour party member has called for an inquiry into sleaze and intimidation. There is Welwyn Hatfield, and Reading—where a fraud squad investigation of the conduct of the direct service organisation was passed to the Crown Prosecution Service. There are Hackney—as we well know—Islington and Coventry. Those are just the top 10. In many parts of the country, Labour remains a byword for mismanagement, incompetence and downright corruption.

We welcome the idea of beacon councils—we are in favour of excellence in local government—but nothing in the Bill defines the criteria for such status, which will be yet another favour for the Secretary of State to bestow or withhold. Once again, he is taking the power to treat similar councils differently, and that will be yet another incentive for councils to curry favour from Whitehall rather than standing up for the interests of their electors.

Either the Bill threatens to let bad councils get away with inefficiency and excessive taxation, or it will open ever more opportunities for Ministers to crack down, which was not quite the expectation of many people who voted for the Government. The Bill represents a sweeping increase in the powers of central Government. It is a further step towards complete control from the centre—the nationalisation of local government. Under the Bill, there is a new panoply of discretionary controls. Although they go in name to the Secretary of State, it will be the Treasury that holds the purse strings ever more securely.

Best value is open to abuse, both by irresponsible councils and by the Secretary of State. It can make it harder for contractors to provide services for well-run councils and to deliver good value and good services to residents, while opening opportunities for Labour to hand out more jobs for the boys. Even the best-run councils will live in fear of the Secretary of State exercising his new and wide-ranging discretionary powers, which ultimately provide the means by which the Treasury can discipline local government beyond the reach of any democratic accountability.

The Bill is unclear. It is half baked. It creates the potential for overbearing central Government, but without the benefits of straightforward rules. The new discretions are open to abuse and capping is made a weapon shrouded in secrecy. The restoration of local government is a vital task for the House, but the Bill is the wrong way to go. I urge the House to reject it.

5.41 pm

Mr. Andrew F. Bennett (Denton and Reddish)

I am delighted to follow the hon. Member for North Essex (Mr. Jenkin) because I want to congratulate him. Today, we have probably seen one of the greatest examples for a long time of bare-faced cheek from any Conservative Member. I welcome his conversion to a belief in local government. It is just a pity that, during the 18 years that they were in government, the Conservatives showed little or no sympathy for local government.

Mr. Jenkin

Will the hon. Gentleman join me in the Lobby to vote against the Henry VIII clause in the Bill?

Mr. Bennett

I would certainly be pleased, if I were to serve on the Committee, to vote against the Henry VIII clause. I agree with the hon. Gentleman: we should not be putting such clauses in legislation, but I wish that the previous Administration had been as good at preventing their introduction as some of us on the Back Benches.

I welcome the proposals to get rid of compulsory competitive tendering because I do not accept that that practice did anything useful for local government. It led to a huge waste of resources because one group of people bid for contracts and another group of people tried to manoeuvre things so that contracts were not awarded in a particular direction.

In so far as any money was saved, it was not a saving to the citizen, although it may have been a saving to the local authority. What tended to happen—it was certainly the experience in my constituency—was that people who lost a refuse contract were re-employed at lower rates of pay. They then had to apply for benefits of various sorts to make their income up to nearly what it was before. The difference was that, instead of having the honour of working to earn the money, they had to rely on the benefit system. That was not to anyone's advantage.

I also noticed that a substantial number of people in the poorest parts of my constituency lost their jobs and that those jobs went to people in richer parts of Stockport. Often, the job went from a breadwinner to someone who had the second job in a household. I do not object to second jobs in a household, but it meant that, in some of the poorest areas of Stockport and Tameside, jobs and income, which was earned as a right, disappeared. That not only impoverished people there, but reduced income opportunities for shops and the rest of the community.

I do not believe that compulsory competitive tendering did anything useful for local government. I welcome the fact that it is to be abolished, but there is not much else in the Bill that I have much enthusiasm for. The whole question of best value is verbiage. It has been already said several times that it is a smokescreen to cover up further Government control.

I applaud the aim of regenerating local government, but there are much simpler ways of doing that. Basically, one has to set local government free and trust the local electorate. Until we do that, it will be very difficult to regenerate local government.

We also have to look firmly at the powers of local government. As long as we continue to reduce the powers of local government, it will be very difficult to increase enthusiasm and interest in it. In the year I was born, the list of powers held by the local authority in the city of Manchester was very long. It was responsible for the gas supply, the electricity supply, the water supply, sewage disposal, buses and trams, refuse collection and disposal, housing and education from nursery schools up to further and higher education. It was responsible for social services provision and the poor law institutions were still under its control. It was also responsible for environmental health, the police, the fire service, parks, cemeteries, crematoriums, libraries, wash houses and baths. I could go on, right down to a substantial share in the Manchester ship canal. Those were extensive powers and they attracted to local government people who were enthusiastic about running those areas of responsibility.

Having taken virtually all those things away from local government, we have to recognise that the situation has changed. Even in the areas of responsibility still held by local government, there is a tendency for Whitehall to want to dictate what is done. We have to recognise that, unless we return to local government far more of those powers, we should stop calling it local government and accept that it is merely local administration of national services. Until we recognise the need to reverse that trend, it will be very difficult to rebuild local government.

It has been suggested to me that if we have elected mayors and cabinet government within local authorities, we will somehow attract people back to serve on councils. The first thing we have to recognise is that we must give much greater status to elected councillors and not, as so often happens, knock those individuals who provide a useful service. We must also recognise the problems of attracting people to such jobs. In the early part of the century many people did not have good educational opportunities. They ended up in relatively dead-end jobs and were very pleased to be able to show their skills and powers of leadership by becoming members of local councils. As a result of improved educational opportunities, the number of people in that situation has reduced dramatically. It is the same for Conservative councillors. Many people were forced into family businesses where they were not able to exercise their skills and they ended up being able to show those skills and their willingness to serve their community through the local councils. Many of those opportunities have now disappeared.

It is extremely difficult for people to get time off work for such tasks. That is not because the employers say that they cannot have time off to work on the local council, but because it is spelt out clearly that if they do, their promotion chances will disappear. If we are to attract people back to serve on councils, we must accept that it is extremely important to ensure that local councillors have status and are offered the opportunity to take time off.

I believe that, as long as local authorities are receiving the vast majority of their funding from central Government, it will be extremely difficult to get back the autonomy. We should return the business rate to local authorities. Until we do, it will be difficult to give them the status they require.

I think that the Government must face the fundamental question of how far local people should be able to make choices. In my childhood, my father used to tell me firmly that I could make a choice if I lived in Greater Manchester. I could either aim to live in the city of Manchester and pay high rates and have high-quality services or I could live across the boundary in Stretford or one of the other smaller authorities surrounding Manchester and pay much lower rates and have much poorer services, unless I was crafty and able to slip across the border to enjoy some of the services provided by the city. People had a clear choice. That choice is increasingly disappearing. That is what worries me about best value. People should have the right to choose to have a lower level of services in their area and to pay less for it. That is difficult if there are national standards for education, social services and other functions.

Will best value apply to education? It seems logical that it should, but we do not want a proliferation of best value measures and the whole inspection system, which currently comes from the Department for Education and Employment.

If we are introducing best value, it is important to take a holistic view and measure all the services provided by a local authority. I am worried that any measuring exercise—be it the simple measurement of profits and costs in compulsory competitive tendering or a system that lays down criteria—will fail to look at the whole picture. I should like to illustrate that by considering the provision of services for the elderly in Reddish. It is not difficult to measure what is provided by social services, such as luncheon clubs and home helps. However, the authority provides or assists with a range of other equally important services for elderly people. The Reddish library provides an excellent service for the elderly to borrow books and talk to people. It is a helpful service for the community. The same is true of allotments, which are often run by a voluntary committee, many of whose members are pensioners. Stockport council should be proud of the support that it gives in that area, but the activity of the parks department is equally important. Stockport' s neglect of the bowling greens has undermined an opportunity for elderly people to enjoy themselves. I should like all those services measured under best value, but it is difficult to achieve such holistic measurement.

Local authorities should not be judged on turnout. It is very important that people have the right to vote and to make local choices, but we should not castigate those who choose not to exercise the right to vote. If they do not bother to vote, we can assume that they are happy with the outcome. We should not get upset about turnout. If we are interested in a high turnout, we should give a 10 per cent. discount on council tax to those who turn out.

The issue is not that important. We should recognise that apathy has always been a feature in local elections. I looked at an electoral register from 1906 which showed the canvassing of the Labour party. It listed the reasons that people gave on the doorstep about why they were not going out to vote. They were: "They are all the same", "going later" or "possibly". The excuses for not voting have not changed much during this century. A few issues such as the poll tax will motivate large numbers of people to vote, but we should not get too hung up about turnout. The important point is that people have the opportunity to make choices.

Mr. Illsley

Does my hon. Friend hold the same view on electoral registration? The register in my area is many thousands of voters down on previous years. Does he think that local authorities should do more and should have more resources to improve the register?

Mr. Bennett

It is important that people should be registered to vote and that we should make it easy for people to vote, but, having done that, we should not get too upset if they remind us sometimes that it is not the most exciting thing. As we take ever more powers from local authorities, I do not blame people who do not particularly want to vote. Changing the system will not increase the number of people who vote.

I welcome the abolition of CCT, but I plead with my right hon. and hon. Friends on the Front Bench that if we can trust the people of Scotland and Wales with devolution, we ought to be able to trust the people of Denton and Reddish, Tameside and Stockport with far more powers to make their own decisions about the level of local government services that they want and how they want those services run. The more that we have to give them best value and diktats from Westminster, the more that we move from local government to local administration.

5.55 pm

Mr. David Curry (Skipton and Ripon)

The Bill is nowhere near as bad as the Minister's speech made it appear. She is occasionally shrill and she does rather blather, but when she does both simultaneously it becomes very tedious.

The Minister mentioned her great four Cs—challenge, consultation, comparison and competition. She did not mention a fifth C—councillors. The motivation of councillors to carry out the changes matters most of all. If we move to new structures of government, the role of the back-bench councillor and the motivation to become a member of a council will be crucial to making the reforms work.

If the system becomes too executive, those who are not part of the inner circle will have to think hard about their function. We want councillors to carry the measures out on behalf of the community—a word that I am not frightened of. I hope that the Minister will remember that most of the community is not represented in the community consultations. Most people do not belong to bodies, organisations or pressure groups and are not represented. We must be careful not to nominate too much. Consumers' organisations are entirely nominated, but claim to represent the community.

The Minister accused us of believing in capping, compulsion and central control, which are the three hallmarks of the Bill. Capping will be more extensive because it can be multi-annual and can be started below the level of the budget, which was not the case under the previous Government. Compulsion lies in the range of reserve powers to be exercised by the Secretary of State, who is part of the central Government.

It would be better if the Government agreed that they should have a view about what it is sensible and right for local authorities to spend. They spend a proportion of the national product and we cannot ignore that. The argument is about how that is done and where a fair balance lies. It is an argument not of principle, but about sensible methods and balance. If we put the issue on that basis, we may be able to reach broad agreement.

The Bill is not a charter for local government liberation. On best value and capping the Government have draconian powers of intervention. For once the notes that accompany the Bill are not as obscure as they often are for such legislation. Normally, they are even more complicated and less comprehensible than the Bill, but that is not so in this case. They give some useful examples, but the word "intervention" appears regularly. Let us not pretend that this is a charter of liberation. Even if local government has been let off the chain, it has certainly been caged, to use one of the Prime Minister's favourite metaphors.

There is merit in best value, but it is more all-pervading than compulsory competitive tendering. It has two fundamental elements. The first is a requirement to undertake reviews of every service within five years. It would be interesting to know in what order they are to be reviewed. Will the difficult ones be taken first; will it be left entirely to the local authorities; or will there be a mixture? Secondly, there is an obligation to produce annual performance plans, which will be subject to audit. An inspection will be either by the existing service inspectorate or by the new Audit Commission—which has become the 7th cavalry in all this—as the best value inspectorate for housing, highways and environmental health.

The hon. Member for Manchester, Blackley (Mr. Stringer), who is just leaving the Chamber, was leader of Manchester city council. He rightly said that CCT had served its purpose. It forced councils to define the cost of a service and to measure its delivery. Before CCT, local authorities were under no such obligation. In that sense, best value is a linear descendant of the principle of CCT. Without CCT there would not have been best value. To be honest about it, the one grew out of the other.

The essential question on reviews is how competitive the service will be required to be. The Government are to produce guidance on competition and it will be critical. Incidentally, I hope that the direct service organisations will have to keep separate accounts, as they do now, so that their finances can be checked and will remain transparent. An enormous amount hangs on the strength of the guidance, which I hope will be published before the Bill is considered in Committee.

Much depends on the powers of the Secretary of State, but some important issues will have to be sussed out in Committee. The role of competition is crucial. CCT got the private sector involved. What are the Government's intentions as regards exposing services to the private sector or to the voluntary sector, or indeed to competition from other local authorities? For example, in education there is the possibility of the private sector being brought in to take over failing local education authorities. Is that part of the best value exercise? Can it be extrapolated to different services?

How do we ensure coherence between the various inspection regimes? The Minister has admitted that there are many individual regimes. How do we achieve a cross-cutting—a favourite Labour word—assessment of them? How do we make sure that a local authority that subjects itself to a rigorous scrutiny and therefore marks itself down does not get hit harder than a local authority that is permissive in the way in which it examines its own services?

The advice that—presumably—the Audit Commission will have to give the auditors will be crucial in achieving coherence in the way in which the services are inspected. What is the methodology in the scrutiny? If there is to be intervention, it has to be triggered by a common standard. We have to be sure that the Secretary of State uses his powers on a basis that can be justified and that they are not seen to be used arbitrarily.

There are also bound to be questions on the timeliness of the performance information from local authorities. After all, the performance indicators will be crucial to the measurement process. We should demand much quicker delivery now that there is to be an annual performance plan. Local authorities have enough experience to generate performance indicators on a much better basis than now.

Some services will have to be pushed hard. Social services, for example, are not inherently less capable of being measured than other services, but operate in a culture in which such a process is alien—a culture that will have to be challenged.

It is important to remember that the services are for people. The process must not become an internal exercise which is hidden from the real world in which the services are supposed to be delivered. Therefore, the mechanisms for involving councillors—which is where the measure moves into the restructuring processes that the Government will no doubt introduce later—and for giving substance to the consultations are also important. I hope that the Minister will say more about that in Committee.

The role of the Audit Commission will also be crucial. The new leader of the Audit Commission, whom I appointed to the Audit Commission, will make a very good General Custer, although I think her fate will be a good deal more felicitous than that of the unfortunate American general. However, she has a difficult job to do. Where the Audit Commission has to inspect, is it intended that it should be an in-house inspection with Audit Commission inspectors, or will the Audit Commission be at liberty or be required to appoint external inspectors or invigilators? Will it have to lay down the rules by which they operate or the standards by which they measure? It is a crucial issue, not least for the staffing requirements of the Audit Commission. Clearly, it will need new staff to carry out its new functions. Will it still be responsible for the performance indicators? It has done a remarkably good job. It has sometimes made people feel uncomfortable, but it is no bad thing that people should feel uncomfortable about the revelation of statistics.

As we all know, the problem with local government is that the top few authorities are extremely good, the bottom few are catastrophic and in the middle is a large mass which is simply not very ambitious. The key is to bring that unambitious mass up to the level of the higher performers. As the Minister said, we want everybody to be as good as the top 25 per cent. However, by definition there will always be 75 per cent. which are not in the top 25 per cent., and it will be more difficult to keep the process going the third time round with the new steps of measurement. The criteria cannot remain the same; they will have to reflect the progress that has been made and the incremental improvement which it is realistic to demand of local authorities.

I now turn to the part of the Bill that deals with capping. The Minister said that "crude, universal capping" will be replaced by what I take to be sophisticated and selective capping. I am not sure that someone standing on the gallows would be overtly concerned as to whether he was about to meet his fate by a crude or a selective method.

Sir Paul Beresford

Judging by what is on the face of the Bill, I am sure that my right hon. Friend is right. It is subjective and selective and it is in the hands of the Secretary of State. However, the schedule is as crude and across the board as ever.

Mr. Curry

I am about to come to that. My hon. Friend, who has much experience of these matters as a giver and a receiver, is certainly right. It is not a new liberal regime; it has two differences from its predecessor. First, the Government can cap over more than one year. As I understand from the extremely complex Bill and the schedule, which is infernally complicated as my hon. Friend said, that is a notification procedure. Secondly, the Secretary of State can be more selective over the terms on which he caps local authorities. It will still be open to the Secretary of State to announce capping criteria in advance, which is a facultative ability under the legislation that the Government propose to repeal.

The explanatory notes do not make clear how the legislation will operate in practice. Some of the Secretary of State's powers are on the face of the Bill, others are not. In fact they stop half way through a sentence. The explanatory notes emphasise that the Secretary of State must have regard to principles, but do not say what those principles are. I am referring to paragraph 10 of the explanatory notes. We need to see the principles, as yet again it is not stated what the principles are. Yet again, the devil is in the detail; how it will operate in practice is what matters to people.

I agree with doing away with pre-announcement as it will force local authorities to make choices. The Minister saw representatives of North Yorkshire county council this morning while I was in a Select Committee meeting. My local authority explained that because of the change in methodology on the social services side it faces a serious problem. As a result, it is consulting the community on increasing the council tax precept by 7.5 per cent. to make good some of the deficit. As my hon. Friend the Member for Wantage (Mr. Jackson) said, an interesting early test of the Government's intentions will be whether or not they decide to live with that if it receives the approval of the local people.

There is quite a difficult distinction between designated and nominated authorities. As I understand the Bill, nominated authorities can have a notional budget which is below their present level of spend. They are then left to work out how to meet their capping requirements.

I now turn to the foggy bit of the Bill which deals with council tax benefit proposals. The provisions depend on regulations that have not yet been announced, so in a sense the Bill contains the gravy, but we do not yet have the meat which is the main course. As I understand it, each tier of authority when it calculates its own precept will have to take account of the extra benefit cost that it will entail and include it in the charge. The district will bill and pay to the county its share of the revenue, but the county has no power to hand back the extra element of the revenue that it raises through the benefit rules.

However, as the hon. Member for Birmingham, Selly Oak (Dr. Jones) made clear, local authorities with a preponderance of properties in the lower bands will find that those living in such properties will be subsidising the poorest people who live in social housing. There is no escape from that. There may be a good intellectual argument for doing that and for sharing responsibility, but the idea that it has anything to do with more effective accountability simply does not stand up. It is so complex in nature that that line of argument is absolute baloney and the Minister would be well advised not to pursue it. The impact will be much tougher in some areas than in others.

If the legislation is carried out effectively, if people want to make it work, if there is a commitment on the part of councils and councillors, and if the regulatory framework is sensible—and if the Audit Commission, a sound body, applies it properly—there is no reason why the Bill should not be effective. The danger is that that will not happen, and that there will be slippage between existing and new requirements.

Before we exult too much at the liberation that the Bill represents, it is worth while pointing out that the Bill retains capping, that the Government have deferred on the regional assemblies—which are more important to the Liberal Democrats than to me—and that the Bill will not restore the business rate.

Mr. David Heath (Somerton and Frome)

I am sure that the right hon. Gentleman will recall our annual pilgrimage to see him when he was in his previous occupation. What is most depressing to some of us is that the three elements about which we complained the most—capping, the uniform business rate and the standard spending assessments—are to persist. The Government came to office with a massive majority to abolish those elements, but they are persisting with them—to the detriment of local democracy and local accountability.

Mr. Curry

I am surprised that the hon. Gentleman did not mention the area cost adjustment. To have got this far in a debate on local government without mentioning the area cost adjustment—or, for that matter, additional educational needs—is quite an achievement. The Government have flunked that matter for the next three years, and the hon. Gentleman can add to his litany of complaints those matters which affect his county, and mine.

Prescription underlines the Government's attitude in the Bill. I have read every single line of every single local government White Paper—there have been a whole string of them from the Government—and the attitude that comes through is permeated with the frustrated spirit of a colonial power exasperated at the antics of the natives, who must be brought under some firm government. There can be self-government in the little principalities, but the imperial framework will remain in place. Following my own experience, I do not necessarily disapprove because, in politics, people often have less choice than they think. We are more honest if we admit that.

The Bill is a different way of doing something that is essentially simple, and I am willing to give it a chance to work. However, we will need to know how it will work, because how the Secretary of State interprets his powers and uses his principles and guidelines will be fundamental. I hope that the Minister will come to the Committee well armed.

6.13 pm

Mr. Eric Illsley (Barnsley, Central)

I welcome the Bill, and I hope to keep my comments relatively brief as a consequence. I wholeheartedly welcome the abolition of universal capping, although I realise that the alternative is to give powers to the Secretary of State. However, anything that this Government come up with will be a lot better than what we had from the previous Government in terms of capping.

In 1990, 20 authorities were capped under the new financial regime imposed by the previous Government. One third of those 20 authorities were coalfield authorities, all of which finished up with very low standard spending assessments. Despite many complaints during the past eight years about the standard spending assessments—and many speeches in this House—there has been little adjustment to them. As a consequence, the low starting point for authorities with historically low SSAs, such as mine—Barnsley metropolitan borough council—has meant that we have had difficulty catching up.

We have had low and unfair revenue support grant settlements. Tory Members of Parliament have previously classified Barnsley—where unemployment levels are traditionally 2 to 3 per cent. higher than the national average—as more prosperous than Kingston upon Thames and, on one occasion, Runnymede.

The most recent settlement from the present Government has been much fairer to Barnsley and has recognised our particular problems. However, my local authority still faces £10 million of cuts in this year's budget, on the back of £40 million to £50 million of cuts since capping was introduced in its present form in 1990.

Even when standard spending assessments were increased for my local authority by about 6 per cent., it made very little difference to our problems because we were still subject to the capping criteria. The hon. Member for Somerton and Frome (Mr. Heath) referred to annual pilgrimages to Government Departments. I can recall pleading with Ministers in the last Government to increase our SSA in relation to the fire service, because the Home Office was telling us that South Yorkshire was below the Home Office's required standards for fire cover. That is how bizarre the system became.

I welcome many of the Bill's initiatives, such as the power to nominate and set targets for future years, or to use them as a baseline. In 1990, the cap came well into the financial year, and it was difficult for the local authority to adjust to the new budget once the financial year had started. It is a good idea for the Secretary of State to have the power to give local authorities a target to achieve in the present year or, alternatively, a target for the following year.

I hope that the Secretary of State will make good use of his power in the Bill to take into account anything he feels relevant in determining any future caps, in terms of designating or nominating authorities. In particular, I hope that he will take into account coalfield authorities where there is a history of low SSAs and low RSGs. In the past few years, colleagues and I have asked successive Governments to review the SSA methodology. It is unfair and arbitrary, and we have provided research from various universities to highlight the problem. The original Webber-Craig authorities looked at the matter, and the Special Interest Group of Metropolitan Authorities (Outside London) is doing so.

SSAs should reflect need. If the methodology introduced by the previous Government had been fair, some of the capping regimes that have been in place might not have been needed. My local authority is not a high-spending authority, and it is not profligate. It always features well in the performance indicators, but it has particular problems. It has low educational achievement and high unemployment, but it has no ethnic minority population, and we lose out under the SSA methodology because of that. Barnsley has been a prudent authority. However, after eight years of cuts, it is having to look at cuts in education and social services—the two areas where we have the greatest pressure.

Like my hon. Friend the Member for Denton and Reddish (Mr. Bennett), I welcome the abolition of compulsory competitive tendering. In my opinion, it was not a success—it failed miserably. It was intended to bring private enterprise and private sector dynamism into local government. However, the hon. Member for Billericay (Mrs. Gorman) let the cat out of the bag when she talked about her local authority bringing services back into public control which had been successfully privatised. The latter was of course the idea behind CCT. However, it lowered standards and cut the quality of services dramatically.

The only way in which the private sector could profit from taking on contracts in areas such as cleaning was to cut the hours of work, the holidays and the wages of those employees involved in the contracts. Some of those private companies made vast profits—basically at the expense of the work force and the taxpayer. Those contracts had low quality specifications, and standards and quality fell. Wages and holidays were cut, and there were redundancies. At the end of the day, many employees had to turn to benefits—particularly family credit—to top up their earnings. So taxpayers were subsidising CCT and putting money straight into the coffers of private companies. In addition, the Equal Opportunities Commission produced reports detailing gender inequalities: many of the employees in those service areas were female and CCT discriminated against them.

I hope that best value will lead to a return to good-quality local services. Quality should be our byword and standards should be raised to the level of the best. The emphasis should be on quality, not on cheapness. We want to go back to having quality services in local government. I welcome the duty to consult that is placed on local authorities, because the public will have their say about the type and quality of public services they want. My local authority has in place mechanisms such as community partnerships whereby it can consult the public; it also regularly consults local business. Such consultation will provide information about how the local people want their services to be run and, more importantly, about whether they want a cheap and nasty service or a quality service to be provided in their area.

Clause 4 relates to performance indicators. My local authority has nothing to fear in that respect, because it is a hard-working and low-spending authority. However, an article in this week's issue of the public sector finance magazine suggests two interesting performance indicators. My hon. Friend the Member for Denton and Reddish spoke about electoral turnout, making the good point that local authorities should not be burdened with having to deal with turnout. However, we have to give consideration to electoral registration because, over the past few years, many electoral registration officers have ignored their responsibility to produce an adequate register. My local electoral register contains duplications and the number of omissions runs into the thousands.

Even if this is not included as a performance indicator, local government should be given encouragement and, perhaps, financial assistance to improve electoral matters in the local area. Some of the issues relating to elections, such as having a rolling register or different voting days, do not fall within the scope of this or any other local government Bill, but we have to improve the turnout in local government elections because it is important that people should participate in local democracy.

I welcome the provisions in respect of a five-yearly review and benchmarking. If, at the end of the process, the benchmarking shows that a local authority is not achieving the level of the best and that leads to privatisation or some other means of providing a given service, so be it. I especially welcome the duty to review whether a given function should be exercised by an authority: it is high time local authorities were given a duty to examine the services they provide and to decide whether it is necessary that they provide those services, or whether they should be provided in some other way. Only by reviewing and comparing can we promulgate best practice.

I welcome the performance plans and agree that the public should be able to see what the local authority intends to provide and how it intends to do so. My local authority recently compiled the responses to a survey to which there was a good public response and which asked the public what services they thought the local authority provided. The local authority and I were devastated to learn that some members of the public still thought that the local authority was responsible for health care in their area. The results of that survey came as a big disappointment, showing that we have to educate the public about what services are available from local authorities and what a local authority is obliged to provide. If people are to understand why their council tax is being increased, decreased or capped, they have to understand the services on which that money is spent.

I welcome the provisions of clause 17, and I know that my hon. Friend the Member for Bethnal Green and Bow (Ms King) will speak at length on the subject. Matters such as terms and conditions of employment, training and recruitment, equal opportunities and the inclusion of people who are long-term unemployed should be permitted in contracts.

Clause 24 pre-empts future legislation in respect of the council tax subsidy and I hope that further thought will be given to the consultation on that. At the end of the day, we are removing capping with one hand and reintroducing a cruder version of capping with the other. As one who represents a deprived area, let me point out that it is the poorest authorities that will be hardest hit by council tax subsidy capping. I hope that Ministers will study closely the consultation responses on that subject.

6.26 pm

Mr. Paul Burstow (Sutton and Cheam)

I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof: this House, while welcoming the repeal of Part 1 of the Local Government Act 1988 concerning compulsory competitive tendering, declines to give the Local Government Bill a Second Reading because, instead of creating a system of local government that is powerful and free, it grants comprehensive powers to the Secretary of State over local government, amounting to the nationalisation of local government, it creates a culture whereby local government is more concerned with the requirements of Whitehall than the needs of local residents, it retains and incrementally increases capping, thus blurring accountability for Council Tax and service levels, it fails to grant a power of general competence to local authorities, and it alters the way in which Council Tax Benefit subsidy is paid in such a way that poor Council Tax payers will pay for the benefits of the poorest Council Tax payers.

I shall address one of two of the points raised in the debate so far and then set out the Liberal Democrats' general view of the Bill. I listened with considerable interest to the hon. Member for Denton and Reddish (Mr. Bennett). In view of his comments on Henry VIII clauses, I hope that his application to be a member of the Standing Committee on the Bill is successful; such provisions cause us considerable concern and are an issue to which we should like to return at a later stage.

We share the view expressed by the hon. Gentleman and by several other hon. Members that it is right that the House should have regard for the way in which it has reduced the status of local government over many years—not only during the lifetime of the Conservative Government, but since the war. The process of attrition and centralisation, whereby powers and functions have been removed from local authorities and transferred to agencies and central Government Departments, has steadily undermined the authority of local authorities and their ability to command the support of local people. It is that, more than any other factor, that has depressed turnouts and the Liberal Democrats believe strongly that there has to be a reversal of that centralising tendency. Unfortunately, the Bill does not in any way contribute to such a reversal.

Mr. Bennett

Although I fully accept that the powers exercised by local authorities have been substantially reduced, the hon. Gentleman should be careful with his argument: turnout figures have not fallen dramatically compared with the period when local authorities had a vast range of powers, for even then turnout was relatively low.

Mr. Burstow

I accept that. One analysis of last year's local election results commented that perhaps we had returned to a level of turnout more typical than that which pertained during the post-war period. There was a run of exceptionally high turnouts under the Conservative Government, when people increasingly used local elections to indicate their displeasure not only with Conservative local councillors, of whom there are now far fewer, but with Conservative central Government and the way in which they managed local government affairs through capping and other measures.

While we are on the subject of reversals, it was interesting to listen to the two Front-Bench speakers, especially the hon. Member for North Essex (Mr. Jenkin). He outlined the newly emerging Conservative policy on local government, which differs greatly from the policy paraded around the country when the Conservatives were in government. Many in local government, especially former Conservative councillors, would have liked to have heard those policies expressed and converted into action when the Conservatives were still in office, because they know only too well the consequences of the failure to do so. Many have told current Conservative Members of Parliament that the reason why the Conservative party no longer runs many local councils is the actions of the Conservative Government.

It is worth bearing in mind that, unlike the previous Government, the Labour Government have decided that it is appropriate for this country to sign up to and ratify the European charter of local self government. We welcome that sign of direction and of a desire to rejuvenate and reinvigorate local government. However, we question whether the Bill will move us in any way towards the noble sentiments and vision set out in the charter. It recognises the importance of independent and democratic local government and describes what local government is. It has tax-raising powers and it is not an agent of central Government. It is not there simply as a service delivery arm for central Government and Whitehall.

Given the Government's desire to sign up to that charter—soon after becoming a Minister the hon. Member for North-West Durham (Ms Armstrong) announced that they were signing up to it—it is surprising that this legislation does not cut central control or remove prescription of service delivery. It certainly does not devolve financial freedom to local authorities.

Mr. John Hayes (South Holland and The Deepings)

On the contrary, the Bill would increase central control. The distinctiveness of local authorities that want to pursue their own agenda would be limited by bland, uniform targets and by "independent" audits, which would force them to adopt a vanilla-style approach and, therefore, would limit most electors' choice of different approaches and options.

Mr. Burstow

The extent to which the Bill would further extinguish the opportunity for diversity and distinctiveness at a local level is a cause for concern and I welcome the fact that Conservative Members are now increasingly concerned about those issues. It is a pity that they were not so concerned when they were in government.

The legislation assumes the worst of local councils. Labour did not take that position in opposition. The Minister referred to what she described as the Conservatives' approach of capping, compulsion and control, but it was a case of the pot calling the kettle black. Undoubtedly, the Bill contains many of those elements and nowhere is that more clear than in part I, which introduces the new regime of central control.

I must make it clear that Liberal Democrats welcome the end of compulsory—or compulsive—competitive tendering, which prevented and, indeed, perverted value for money. CCT resulted in local authorities being forced to deliver services on the basis of little more than trying to find the bargain basement price, not the highest-quality goods. We have always regarded that as an unacceptable product of the CCT regime. CCT did not bring the discipline of the private sector; it left councils tied up in red tape and bureaucracy, creating a huge industry for lawyers, consultants and all sorts of other agencies. Often, the so-called savings resulted from increasing staff insecurity and lowering wages.

The Liberal Democrats have never opposed the principle of private sector involvement in the provision of public services. Indeed, many of the authorities that we control are doing just that. However, we have always objected to the element of compulsion that CCT necessitates. The so-called best-value regime that is to replace CCT is in danger of being as hidebound in red tape and as knee deep in consultants as it ever was.

The Bill will grant the Secretary of State wide-ranging powers to guide and direct the new best-value regime. Indeed, a future Secretary of State armed with the new powers—perhaps a less benign Secretary of State—could reintroduce compulsory competitive tendering without the need for primary legislation. The Bill goes further than the wildest dreams—I stress that—of Nicholas Ridley and his view of how local government should evolve into annual meetings to let contracts. The wording of this Bill would allow a Secretary of State with a very different view from that of this Government to enable such changes without reference to Parliament, except to a Committee considering regulations that are not susceptible to amendment. That is why the Bill is unacceptable. The changes would not be subject to the sort of parliamentary scrutiny that I think appropriate. Indeed, my colleagues feel strongly that the scrutiny allowed is inappropriate.

Of course, competition remains an important element in the best-value regime. We do not object to that and it is important that competition and the ability to benchmark and to market test are appropriate. However, if a council knows from opinion polls, citizens' panels and other public consultation methods that go beyond sectoral interests, that a service is effective and popular with local residents, will it still have to subject that service to market testing under the regime? Many hon. Members have commented that the devil is in the detail. It is important that the regulations and guidance are available to the Standing Committee when it considers the Bill. Only in that context can we meaningfully scrutinise the legislation and debate where it will take us and local government.

Effective performance management is the key to high quality, cost-effective service delivery. Councils successfully deliver efficient services that are geared to the needs of their communities if they have built performance management into the organisation. There are different approaches to performance management. If one asked any three consultants, I am sure that they would offer different answers—for a price, of course.

Market testing and competition can help councils to achieve efficient service delivery, but the individual council and its electorate should be left to decide which services to market test, which to run in partnership with other organisations, whether in the private or the voluntary sector, and which should remain in-house. Indeed, it is important that local authorities should be able to retain an in-house capacity against which to benchmark and also to safeguard the public interest if a private contractor failed or where there was no other competitor in the local marketplace. Otherwise, we would have the bizarre situation of there being no facility in place for the service to be re-provided within the authority. That has been one of the down sides of the way in which CCT has operated.

The Bill is unacceptable to Liberal Democrats because it has such sweeping powers. I referred to the Henry VIII clause, clause 14, which would give the Secretary of State the power to rewrite other Acts of Parliament. The Bill as drafted would greatly extend the remit of the Audit Commission.

Ms Armstrong

Perhaps I can help. Clause 14 exists in its present form because we want to facilitate new ways of working. For example, we want to enable health authorities and local social services departments to pool budgets. Where appropriate, we want authorities to develop waste management programmes, not necessarily to separate collection and disposal, and that is impossible in two-tier authorities at the moment. We cannot do so in a way that will give local authorities flexibility to decide whether such a move is appropriate for them without doing so in that way.

If the hon. Gentleman persists in opposing those provisions, he will, for example, restrict the ability of authorities to work together. One authority that was a best-value pilot discovered that it organised only 10 adoptions last year. It has said that it is crazy for its social services department to offer a full adoption service and that it should be able to work with a neighbouring authority. The Bill would give authorities the freedom so to do. However, Parliament must be able to agree decisions to keep the public audit trail right.

Mr. Deputy Speaker (Mr. Michael Lord)

Order. I understand that the Minister is anxious to give the fullest possible explanation, but the Front-Bench spokesmen will have the opportunity to deal with such points when winding up.

Mr. Burstow

I am grateful for that full explanation of the Government's intention behind the clause, but we must have regard for the fact that the Minister and the Secretary of State will not always be in those posts and that others could use the powers entirely differently. That is why we are expressing our concern and why we want to be clear about the procedures and the ability to amend. The Bill would allow alterations through regulations, when hon. Members would be allowed to vote yes or no, but they would not be allowed to consider, amend or change such regulations. That is a fundamental weakness of the Bill. A better way to secure what the Minister wants to achieve is to introduce a power of general competence. That would be in accordance with the representations made by the Local Government Association and—many times—by Liberal Democrats. We would support the Bill if it introduced that power and put in place a process by which Parliament would get what it needs but which also gave greater freedom to local government. Although we shall discuss the matter further in Committee, we object strongly to the Bill in principle because it does not offer that.

Dr. George Turner (North-West Norfolk)

Is not the hon. Gentleman's criticism of the Bill in fact a criticism of the way in which the House works? The problem is that the House does not properly scrutinise Government. That is not the fault of the Government, who want to introduce sensible management into local government. It is for the House to modernise scrutiny of Bills and secondary legislation: if hon. Members addressed that matter more forcibly, we should make some progress.

Mr. Burstow

I could not agree more. I hope that the hon. Gentleman will vote with us when we press those very points. We firmly believe that many elements of the House's procedures could benefit from the modernising zeal about which Ministers often speak. Such modernisation would ensure that the House could scrutinise the Government's actions and legislative proposals more effectively than at present.

The Bill greatly extends the remit of the Audit Commission. I strongly support that organisation's work and the non-partisan and effective manner in which it operates, but the Bill could add a new dimension to the conflict that can arise between local councillors and auditors. That is because, when assessing best-value plans, it is possible that auditors will go further than a review of the process involved in assembling such plans and will stray into challenging directly local authorities' policy priorities.

As the Bill is drafted, it appears that the Audit Commission may have to issue guidance and give support to local authorities. It will be interesting to learn how much extra Ministers think that local authorities will have to pay in fees for such additional services.

Reference has been made already to the 100 or more local authorities, under the control of all parties, that are engaged in best-value pilot schemes testing the practical effect of the ideas contained in the Bill. How will the lessons from those pilot schemes be translated into the provisions of the Bill and the regulations and guidance to be issued subsequently? I hope that the Minister will give some indication of the timetable and the process involved. When will the information derived from the best-value pilot schemes be shared with the House?

Questions also arise with regard to the duty to implement best value and the drafting of clause 3, which omits any mention of equality or environmental sustainability. We are especially worried that the Bill does not refer to either of those matters, and we shall press Ministers on them in Committee, as we believe that they are important and must be given due regard in the application of the best-value regime.

I turn now to capping, whose scope the Bill in fact extends because it allows a more sophisticated selection of authorities that may be capped. We have consistently opposed the principle of capping, as we believe that it blurs accountability. Council tax payers faced with higher bills or poor quality services will not know to whom they should complain. Should they express their unhappiness in writing to Ministers or to local councillors at their surgeries, or should they boot out those councillors at the next local election?

As has been said already, the new regime will introduce more secrecy into the process. It will be harder for treasurers and councillors to make judgments in advance of capping to protect their local authorities' interests when it comes to setting budget requirements and council tax levels. The absence of pre-signalling will be damaging. In the interests of local democracy and of genuine local accountability through the ballot box, we should prefer capping to be abandoned altogether.

The Bill paves the way for the introduction of the council tax benefit subsidy limitation. The previous Conservative Government introduced a housing benefit subsidy limitation, and this Government are to employ the same claw-back mechanism for council tax benefit. Even though some Labour Members are continuing their campaign for changes in what they believe to be an unfair housing benefit regime, they are likely to support the introduction of the same unfairness into the council tax benefit system.

We believe that the proposal will penalise councils that spend slightly more than what is dictated by central Government. The Local Government Association has calculated that there are at least 23 local authorities in England which, even if their spending levels match those of the Government's standard spending assessments, will be penalised by having council tax benefit subsidy clawed back. That seems even more unfair in the light of what the Minister said earlier about achieving a balance between the interests of taxpayers at national and local levels. How can it be fair for central Government, by means of the new device contained in the Bill, to claw back benefit paid to support services at the level that central Government will have deemed appropriate? The Government must examine closely the details of the scheme, which clearly will penalise some of the poorest councils and people in the country.

The Bill will restore, by the back door, the system of crude capping. It will amount to another way in which the Government will be able crudely to direct local authorities in the conduct of their affairs, and we shall oppose the measure for that reason. As our reasoned amendment makes clear, we believe that the provision is inappropriate.

What is the reason for the haste behind the introduction of the council tax benefit limitation? In the coming financial year, even though they may not be pre-signalling, the Government will continue to implement the existing regime of crude and universal capping. So why are they hurrying to rush through Parliament this Bill and its associated regulations to enable them to impose this additional central control over local authorities? What is the rush? The scheme has been announced, but local authority associations and treasurers have not yet seen the scheme's precise details. That makes it much more difficult for treasurers to advise local authority members about setting appropriate budgets.

The Bill fails to put in place the building blocks needed for the reinvigoration of local government. It does nothing to tackle the democratic deficit caused by the domination of one-party councils as a result of the first-past-the-post electoral system. [HON. MEMBERS: "Here we go."] Hon. Members may say, "Here we go," but they would have been even more surprised had I not made some reference to a voting system that causes too many councils to be complacent about the views of their electorates because they know that they will not be tipped out of office. The present system reinforces one-party domination of councils.

The Bill does nothing to introduce the wider power of general competence to which I referred earlier, nor does it increase local financial autonomy by returning control of the business rate to local councils.

Mrs. Gorman

Does the hon. Gentleman care to remember why the business rate was reorganised? It was because, rather than increasing the domestic rates, local authorities—largely Labour councils—were milking the business community. They often doubled and sometimes trebled the business rate year by year. The Government had to introduce measures to protect the business community. Incidentally, many areas with poorer populations benefited from the redistribution of the business rate from councils such as Westminster, which provided a very large part of the money.

Mr. Burstow

There are two or three points there. First, the introduction of the uniform business rate has done considerable harm to the interests of small businesses in many areas. That remains a concern of the various organisations that represent small businesses. Secondly, research that was published even during the passage of the legislation to introduce the uniform business rate showed that there was little evidence of the adverse effects on businesses that were claimed to be the result of the level of the business rate. Thirdly, the Government suggested in the Green Paper ways in which there could be linkage between business rates and the council tax so that councils could not shift the burden unfairly onto the business rates, as the hon. Lady claims that they used to do.

For all those reasons, we do not accept the hon. Lady's argument. We hold to our view that the business rates should be returned to local control. That would make for a more buoyant local tax base and a fairer distribution of funding between that which is raised centrally and that which is raised locally. That is the first step back to greater financial independence for local authorities and more accountability to their local communities. That is why we strongly commend the idea to the House again today.

Best value and sophisticated capping are the products of pre-election promises made by the Labour party. Capping and compulsory competitive tendering are now effectively to be changed, but they are not to be brought to an end. The Bill strengthens ministerial control and further weakens local accountability. The Bill fails to strengthen local accountability. It is prescriptive. It turns councils into service delivery arms of Whitehall.

The Minister said in her concluding remarks that the Bill put local people in the driving seat. In our view, it does not put local people or local councils in the driving seat. Rather, it puts the Secretary of State in the driving seat. Indeed, the Secretary of State, through the Bill, is highjacking more powers from local authorities. He is leaving councillors and citizens on the hard shoulder.

6.53 pm

Ms Jenny Jones (Wolverhampton, South-West)

Like many other hon. Members who are contributing to the debate, I used to be a councillor. I served for six years on a metropolitan district council in the west midlands. As people know, metropolitan district councils have an obligation to deliver many services. My party was in control for four of those six years and in opposition for two. We were put into opposition by a coalition of Conservatives and Liberal Democrats. We hear a lot of talk these days about coalitions with the Liberal Democrats. I thought that the House might like to know that coalitions can be fairly flexible. I have watched closely local Liberal Democrats and Conservatives in power and they have an interesting interpretation of democracy and accountability. I will leave it at that.

My hon. Friend the Member for Denton and Reddish (Mr. Bennett) eloquently summed up all the disadvantages of compulsory competitive tendering and what was wrong with it. It is certainly high time that it was got rid of. There is one disadvantage that no one has pointed out and that I would like to throw into the pot.

In the six years that I was a councillor, I was able to watch at first hand the implementation of white-collar CCT. One of its major effects was to set departments against departments, officers against officers and members against members. An enormous blame culture got going in the local authority. That was not peculiar to my authority; it happened in local authorities across the land. The hon. Member for Salisbury (Mr. Key) said that CCT led to joined-up local government. It did nothing of the sort. It achieved the opposite. That is one of the biggest reasons why it is about time that it was gone.

Earlier this morning, I was fortunate enough to listen to a couple of representatives from local councils that have been best value pilots. They said that one of the advantages of best value was that it encouraged inter-departmental working. Members and officers had to work much more closely together to ensure that they met local needs and delivered the services that people wanted. I am willing to keep an open mind on best value. If it achieves a better working culture within most councils, it will be something to be welcomed.

However, I have two major reservations about the Bill. The first is about the standards and performance indicators for best value. If I read the Bill correctly, it does not contain any mechanism for asking councils what performance indicators they would like. My hon. Friends on the Front Bench will have to allow councils to shape the standards against which they are to be judged. Not all councils are the same. Populations have different needs. We will need to build in some flexibility and allow councils to have a say about how their performance is measured. I have a fair degree of scepticism about leaving it to central Government Departments to set the performance indicators. If we do that, we shall simply replace prescriptive, top-down CCT with prescriptive, top-down best value.

When we won the general election, most councils thought that the days of edicts handed down from central Government Departments and of being told, "This is the way you are going to do it—like it or lump it," had gone. I urge my hon. Friends the Ministers to consider ways in which councils can be consulted in setting the performance indicators.

The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones)

I think that my hon. Friend misunderstands the intention of the Bill. Yes, targets will be set nationally. It is important that local authorities can be compared easily against the same standards, but local authorities will be required to devise their own performance indicators as well.

Ms Jones

If I have misunderstood the Bill, I stand corrected, but the Bill is in its early stages. I shall monitor its progress closely as it goes through Committee, into the other House, and comes back again. I need reassuring on that point.

My second reservation is about capping. Universal capping is going, and I am pleased about that. It was a crude instrument—a sledgehammer of an instrument. It was anti-local democracy. However, the Bill should spell out what the Secretary of State's reserve powers are, what will trigger them and how they will be implemented. We hear a lot about transparency and accountability, but councils also need transparency. They need to know not only where but what the goalposts are. They need to know what they are aiming at. The Bill is not clear about what the reserve powers are and what will trigger them.

My hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) was right about accountability. I was always led to believe that the ballot box was the ultimate accountability. My former council, like many others, has elections every three years out of four. It may be worth while the House remembering the reason why we do not have elections in the fourth year. In the 1980s, the Conservative Government's relationship with local authorities got so bad that they abolished a tier of local government because they did not like the fact that councils insisted on thinking for themselves.

Many councils have annual elections. As an ex-councillor, I assure the House that nothing concentrates one's mind more than the knowledge that one must go to the electorate each year to discover whether the people like what one has done. We should not get too carried away with rhetoric about the unaccountability of councils. I think that they know more about accountability than do some central Government departments or regional offices of Government.

For more than 100 years, most councils have delivered services to the best of their ability. Many councils and councillors work extremely hard. Earlier in the debate, the hon. Member for North Essex (Mr. Jenkin) read out the usual list of councils that have not been as competent as they should. However, to be honest, they are in the minority. I believe that councils—whatever their political control—and councillors work extremely hard to deliver the services that they think the electors want. For many years, they have done so in a very hostile climate.

Most councils now want a much more positive working relationship with central Government. They want to see a partnership. We hear an awful lot about that these days, but I think that councils want a genuine partnership between local and central Government. I urge my right hon. and hon. Friends on the Front Bench not to forget that as the Bill moves through Parliament. We must not let down the councils when they are seeking a new way of working with central Government.

7.2 pm

Mr. Robert Jackson (Wantage)

I agree with the hon. Member for Denton and Reddish (Mr. Bennett) that local government in Britain today is in the grip of a malaise. With great respect to my very good friend, the right hon. Member for Skipton and Ripon (Mr. Curry), I do not share his apparent complacency about the situation. He may have been a better colonial governor than the present one, but the empire simply must be dismantled.

The reason for the malaise is a fundamental ambiguity in our understanding in Britain of the basis of local authority. That ambiguity is increasingly disabling, and I suggest to the Government and to my party that it must be resolved—not least because, until it is, the constitutional reconstruction which is under way, and which I think everyone now accepts is irreversible, will not be complete. The ambiguity to which I refer goes back a long way and is neatly encapsulated in the title of an academic book on mediaeval English local government: "Self-Government by the King's Command". In other words, local communities must govern themselves but their authority comes from the top downwards and not from local communities upwards. The Minister paid lip service to the idea of self-governing local communities, but her answer to my intervention about my county of Oxfordshire demonstrated that she is as much trapped in this ambiguity as any one of her predecessors.

To understand the problem that we face, we must first understand the three great forces that have reinforced the top-down nature of our system of local government over the past century. Those forces have operated under Governments of all three parties.

The first force is the increasing cost of the widening range of services provided by the state. In 1900, local government spent roughly half of total Government spending of £19 billion—that is the figure in today's money; in 1900, it was only £272 million. About half of that amount was raised in local taxation—that is to say, local government raised one quarter of all public spending. Today, at the end of the century, Government spending amounts to some £333 billion, of which local revenues yield no more than one sixteenth.

The second force making for centralisation is the idea that government services must operate to uniform national standards and by nationally standardised procedures. The hon. Member for Sutton and Cheam (Mr. Burstow)—who is just leaving the Chamber—referred to the history of this question. He might like to note that the first big step towards centralisation was taken by a Liberal Government in 1906—admittedly a long time ago—with a national system of labour exchanges run by Whitehall. The next great step came after 1945 when the Labour Government decided to create a national health service rather than allocating new duties to the existing system of local government. That was a fateful step, which created a system of local administration parallel to local government but with different boundaries and without the benefit of local election. Since 1945, such parallel systems have been elaborated in a host of new areas almost exclusively by transfers out of local government and hardly at all by transfers downward from central Government. As result, nowadays more people appointed by Ministers are holding office in local bodies than are elected by local people.

I think it is fair to describe this as an obsession with national uniformity. One of the most disastrous consequences of that obsession is the fact that the perfectly proper principle of equity between different regions of the country has been used to justify a set of mechanisms that has reduced local financial discretion to the almost marginal. The Bill continues that mistaken approach. In the name of equity, business taxation has been centralised and all local spending, including the capping regime, is determined by formulae devised in Whitehall. If the gentleman in Whitehall does not know best, it is only because his computer knows better.

The third great force making for centralisation is concern for efficiency. The Minister laid great stress on that in her speech today. Especially under the previous Conservative Government, local government was distrusted as it was seen to be too liable to producer capture and political manipulation. I sense that that distrust persists in the Bill and its concept of best value. Over the past 20 years, a raft of functions has been transferred from local government to the new parallel structures in the fields of housing, education, career services, waste regulation, the provision of homes for the elderly, highways and so on.

Anyone who thinks that the rejection of local government was an exclusively Conservative phenomenon has only to look at the policies followed by new Labour since 1997 in relation to youth crime, community safety, raising educational standards and the provision of social care. As Harold Wilson once said, "Whoever is in office, the Whigs of Whitehall are always in power."

National performance standards, cost control, equity and efficiency are important and legitimate concerns. They represent important principles that deserve to be respected. The problem is that, in this country, they have been pursued beyond reasonable measure and without regard to countervailing considerations. This Bill is no exception. One might say that those principles are the typical product of a polity that has dispensed with the concept of checks and balances.

Mr. Jon Owen Jones

I am fascinated by the hon. Gentleman's contribution and by several speeches by Opposition Members in which they have reinvented themselves before our very eyes. Does the hon. Gentleman agree that he is able to condemn this country for being more centralised than our neighbours because other western countries have varying degrees of devolution to regional bodies? I do not recall the hon. Gentleman's supporting our devolution proposals.

Mr. Jackson

Governments of all parties share responsibility for the current situation. That is the spirit in which I make my remarks. I want to outline the dangers of the situation that we are in and to explain what we should do about it.

The fact is that the slogan of equity and efficiency could lead us to do away altogether with elected local government. It could even justify our doing away with elected national government. A body such as the European Commission—if I dare to mention it—could undoubtedly run this country with adequate equity and efficiency if they were the only values that mattered. We have to recognise that what is at stake includes the principle of representative government and the idea of accountability to elected people. In our treatment of local government over the years, our position in the House reminds me of the proverbial cartoon character who is depicted busily sawing off the branch on which he is sitting.

To my party in particular, I want to make a particular point. In the late 1980s, we were drifting towards the idea that, at the local level, accountability towards elected representatives could be replaced by accountability to the users of public services through the operation of internal markets. There are still those who find that a seductive vision: every school grant maintained; every doctor a fundholder; every public service run by people engaged on a fixed-term contract by a Minister applying transparent performance standards constructed on the basis of surveys of user preferences.

The problem is that we have no warrant from experience that practice matches that beautiful theory, in which politics is reduced to a subdivision of marketing and citizens are regarded essentially as consumers. How much power do users have in relation to monopolistic public services dispensing scarce goods? Can "Exit" replace "Voice" in those services? How does the fragmentation that the theory entails enable us to deal with the many problems that are best tackled on an integrated multi-service basis? Are we not coming to recognise that the world of opinion polls and focus groups is dangerously open to manipulation by the power holders? Can accountability in the detail that matters to users be ensured through fixed-term contracts? We should always remember that the American authors of "Reinventing Government" framed their ideas against the background of the highly developed and constitutionally guaranteed system of representative local government that we in this country lack.

I point out, in answer to the Under-Secretary of State for Wales, the hon. Member for Cardiff, Central (Mr. Jones), that the British system—or perhaps, after devolution, we should now refer to the English system—has become excessively dependent on a single instrument: the accountability of Ministers to Parliament. All Members of the House know that instrument to be a broken reed. As the question of what we are doing to improve our procedures has been raised, let me point out that the Modernisation Committee is doing nothing about that.

My conclusion is that we all need to go back to fundamentals in local government. I welcome the recognition of that, although it was derided by Labour Members, by my hon. Friend the Member for North Essex (Mr. Jenkin), who spoke from the Front Bench. The fundamental question that needs to be resolved is whether local government is to be an expression of local self-government or no more than one way among others of delivering services. Another fundamental question follows: how far can we and should we do without the representative principle?

If we study the deep-rooted political traditions of this country, we know the answers to those questions. On those fundamental matters there is common ground between the Tory tradition of limited government and pluralism of powers and the radical liberal tradition of democratic citizenship. The only political tradition that sustains our present approach is that of the old-fashioned socialist top-down bureaucratic planning of which Whitehall is now the last exponent in the civilised world.

Once we have answered those basic questions, all the other questions of equity and efficiency, difficult as they are, can be more easily answered. The answer lies in finding a balance between what they require and what local choice, diversity and pluralism require. The key issue is encapsulated in the figure that I gave earlier—locally raised revenues now amount to no more than a sixteenth of total public spending. No other advanced country works in that way. Let us look to other countries, recognising that, if they can make subsidiarity work, so can we.

The Bill does not address the fundamentals that have made us one of the most over-centralised and least accountable polities in the western world. That is a task for a future Conservative Administration, which I hope will devote to our national political life the same radical energies that the previous Conservative Administration devoted to our national economic life.

7.14 pm

Mrs. Christine Butler (Castle Point)

I enormously enjoyed the speech by the Opposition spokesperson, the hon. Member for North Essex (Mr. Jenkin), who performed a volte face by largely supporting the Bill, gave a litany of disclaimers for his party and made accusations against Labour-controlled local councils. Although he is not in his place, I shall enlighten him about what his party used to get up to in local government. I have direct experience of that because when Castle Point suffered under a Conservative administration, one of its members was well known for boasting that no one could teach him very much about corruption and it would take a majority of freemasons for the council to make any decision.

I was delighted to listen to the speech made by my hon. Friend the Member for Denton and Reddish (Mr. Bennett), who gave wonderful descriptions of authorities in the great days of Victorian municipal authorities before the first world war. I am afraid that the world has moved on since then, although he rightly pointed out that, in most respects, people have not changed much in their attitudes to local or any other government.

I welcome the establishment of the best value regime that will replace the outdated, inadequate and unpopular compulsory competitive tendering system. I welcome also an end to crude and universal capping.

Some hon. Members have read too much into the Bill before us; it is not the definitive, all-purpose local government Bill. More is to come, and it would be appropriate to discuss at a later stage some of the matters that have been mooted this evening.

The Bill has a simple message: best value replacing CCT; a regulatory regime that will enhance local government performance; and the Secretary of State taking a bottom-line approach by using reserve powers to police local government measures. I share other hon. Members' reservations about those latter aspects.

The principle of best value has been endorsed by stakeholders across a spectrum of national bodies including local government. From my experience, I know that members of the public appreciate, understand and welcome best value. The principle of best value in local service provision and the necessary consultation provided for in the Bill will increase public confidence in local government. More specifically, the Bill heralds a new and meaningful approach to participatory democracy through greater accountability, transparency and consultation. We must, however, be careful that the principle remains whole and clear in legislation and will shine through in the practical implementation at local level.

I should like the Government to make a commitment to a national scheme to give support and advice to local authorities that are developing best value. Despite the expected benefits that may cascade from the example of beacon authorities, sufficient evidence exists of a need for a resource to help to develop skills, particularly in researching supply markets, in procurement and in restructuring councils. Although I would have liked schools to have been included, and a single standards inspectorate to be established, I welcome the proposed inspectorate forum, which will at least create a coherent framework for inspection.

Although I welcome the proposed guidance in particular areas that the Secretary of State will give local authorities, we need more flesh on those bones. As the Bill progresses, I hope that there will be a clearer indication of which performance indicators will be used for the objectives of cost, quality outcome and public expectation. I hope, too, for greater clarification of the principles that will determine excessiveness.

7.20 pm

Sir Paul Beresford (Mole Valley)

Like the hon. Member for Castle Point (Mrs. Butler), I come from a background of local government. It is interesting that so many hon. Members who have spoken do so too. As a result, the House has seen through the sugar coating on the Bill's bitter pill. The first portion of the Bill, which plays to the Labour unions, especially in local government, is the sugar coating. It placates those in the unions, and Liberal Democrat and Labour councillors, whose concerns about compulsory competitive tendering have been expressed in the debate. Such concern neglects to see CCT in the light of the times in which it was originally introduced.

The second portion of the Bill is the bitter part: blatant capping. There is no doubt about that. The hon. Member for Barnsley, Central (Mr. Illsley) said that the Bill takes away capping with one hand and puts it back with the other. That is not so. It removes capping with one hand, but puts it back with both. There are two forms of capping in the Bill: subjective capping in the main part of the Bill and a crude, across-the-board capping in the schedules.

As far as Labour councillors are concerned, this is the best value Bill. The words "best value" sound nice. I imagine that they roll easily off the tongues of spin doctors. The concept sounds easy to sign up to. It even sounds as though it might benefit somebody. However, as has been spelt out time and again, there is not enough in the Bill on which to grip in order that hon. Members may decide whether best value will work.

We have a White Paper, a vague Bill, regulations to come, discussions, and so on. Member after Member has asked for clarification. As discussions are continuing, perhaps the Government might seriously consider, for the benefit of people in local government and of hon. Members on both sides of the House, delaying a little the Bill's consideration in Committee until more information and clarity is provided. The touch of good will for the Bill is being destroyed by the lack of information and understanding. Many of us are concerned that residents in central areas, which are generally run by the Labour party, will receive worse, not better services.

Competitive tendering, which is common practice in the business world and in many western countries, has become political in this country. It was introduced to try to create decent local government services; to try to get local government to understand its services, set standards in them and provide fair value.

Ms Margaret Moran (Luton, South)

Does the hon. Gentleman consider that the previous Government achieved best value, given that an Equal Opportunities Commission report found that compulsory competitive tendering cost more than £250 million—twice the savings that it purported to achieve? I do not think that that is best value. Is the hon. Gentleman's concept of best value the same as the one that we are discussing?

Sir Paul Beresford

The hon. Lady should look at the most recent independent report on a large number of local authorities, which describes their opinion of CCT. Instead of going through the long report, I shall quote the summary, which concludes that most authorities have achieved significant cost savings in addition to those previously obtained. At the same time, most Authorities believe that the quality of service provision has improved. That is clearly an independent report. From my experience, the hon. Lady's supposition is wrong. Even The Times—quite some time ago, I admit—praised in an editorial the benefits to local people in quality of service and value for money from CCT.

The Government have done a few correct things in the Bill. They have built on the previous Government's ideas concerning the Audit Commission and the district auditor, the three Es—economy, efficiency and effectiveness—and the citizens charter approach, to which blatant reference is made.

I am concerned that such good things will be destroyed by the apathy of which the hon. Member for Denton and Reddish (Mr. Bennett) spoke, as a result of the Labour party's idea of consultation, which I understand and, to a degree, support. Although consultation is laudable, it is set up in such a way in the Bill that it could end up providing a cover. People may be persuaded of the quality of services, which could and should be better, by the reviews, discussion and documents poured on them.

There is talk of competition yet, under the Bill, authorities will be able completely to cut out competition with the private sector—either directly or indirectly. Without doubt, that will lead to a diminution in service quality and an increase in costs. It saddens me that, as a result, inner cities will be hurt most.

The hon. Member for Denton and Reddish talked about apathy in voting. I suspect that we are doomed to find the same in the consultation exercises as they are set out in the Bill. Let us consider the example of a London council. As a best value authority, it will be required to consult residents, service users, tenants groups, residents groups, businesses, neighbouring councils and probably the Government office for London, diocesan boards, health authorities, public utility companies, the Department of Social Security, some professional groups, and so on. The list could—and if there is a cover-up, will—go further. The beleaguered residents of that London borough will be consulted by the borough, the police, the fire and civil defence authority, the development agency, the waste authority, Transport for London, the mayor of London and the Greater London Authority. All that is just on the duties.

Next, each local authority will have to prepare a best value performance plan for each financial year. Each plan will be published before the following financial year, and, hence, will be based on the data of the previous financial year. Thus, it will be 18 months to two years out of date. For the plans to be useful, they must be voluminous and impenetrable—utterly beyond the ordinary resident. That will be a turn-off. The Denton and Reddish apathy will strike. There will be genuine interest in some aspects of services among businesses and directly linked organisations—perhaps among others, too. However, the process will create such apathy that the ordinary resident will be most unlikely to respond. The odd resident will respond to everything, but, from my experience, with some exceptions, emphasis should be on the word "odd".

Ministers assure us that the district auditor will be closely involved. I hope that they will ensure that we are not contemplating a new bureaucratic superstructure, which will be set up by the auditor and chargeable to the council tax payer. It must not be allowed to become a gravy train. If the Minister wants any advice, he should suck in his pride and speak to Westminster council.

As has been said, compulsory competitive tendering is to go. The White Paper tells us that it will still be available as an option, but because the element of compulsion will be lost and the rules will be changed, local authorities will be able to fiddle the tendering while making a show of putting out for private competition.

The loss of quality and value for money will be covered by reviews and excuses. That is the reason for clause 17. It is a sop to the left. The removal of non-commercial considerations from competition for best value for money will mean that some local authorities will try to beat the system. They will turn competitive tendering into a farce and will stack the odds against the private sector so that there will be no real competition.

I seek a categorical assurance from the Minister that it will not be possible to use clauses 14 and 15 to allow a local authority partly or wholly to own a company that is set up for municipal trading. As the Bill is currently drafted—and because we have been provided with so little detail—that seems possible. It would be deplorable if public companies—by which I mean publicly owned companies, in the form of local authority companies—could compete against the same private companies that pay the council's business rates and whose workers pay the authority's council tax.

I suspect that the Government hope that many Back Benchers will focus on the sweet first half of the Bill and not notice the second half. It has been fairly evident this evening that at least some of them have noticed the difference. The Secretary of State told us that crude across-the-board capping had gone. He had the wit to say that he had replaced it with another form of capping—a subjective form. The present proposals go further, introducing a subjective form in the Bill itself and crude universal capping in the schedules to it.

To add to the woes of local government, as we have heard, the Secretary of State will for the first time be able to set a cap at a level below authorities' standard spending assessment. I hope that some Government Back Benchers have thought about that. I shall watch with interest the reaction to the Bill of hon. Members representing constituencies in Labour-controlled Brent, because as matters stand, that local authority will make itself heard loudly.

The main part of the Bill will not bring best value in services to council residents throughout the country. The control is vague, bureaucratic, distant and in many cases will be based on data that are horribly out of date. In summary, I do not believe that the Bill will work as well as one might wish. It will be a poor substitute for CCT. The capping proposals take little account of changes in circumstances. We will hear more about that in time to come from Labour Back Benchers as well as from the Opposition. The proposals allow for unfair, subjective application, and for the first time they allow capping below SSA.

7.34 pm

Dr. Alan Whitehead (Southampton, Test)

It must be wonderful to be a born-again shadow Local Government Minister. One can repudiate everything that the previous Government did as a result of the application of a particular ideology, while at the same time defending that ideology and skipping easily over the evident contradiction between the two positions.

I shall deal with the solution to that contradiction—the release from the ideological impasse in which the previous Government placed local government—by looking at best value as a way forward. Best value is defined in clause 3 as securing continuous improvement in the exercise of all functions undertaken by an authority, whether statutory or not, having regard to a combination of economy, efficiency and effectiveness. It should be noted that the definition calls for continuous improvement in all functions. Account must be taken of the three Es—economy, efficiency and effectiveness—but it is essentially improvement in the round. My personal view is that we might add a fourth E—equity—to make it crystal clear that our intention is to secure improvement in the round.

The Bill makes it clear that improvement must be judged by a variety of factors. To what extent does the community accept that there will be improvement? Is there improvement in allocative efficiency—that is, the best overall outcome of service delivery—or is it simply a cheaper service for a cheaper specification, as we previously experienced?

It is interesting that the Opposition make a great point of the fact that best value is not obsessively defined in the Bill, as CCT was under the previous regime. That is the point. The idea of a partnership with local government, and of the community being able to judge the outcome and suggest how a particular service trajectory may go means that everything should not be obsessively laid down, because flexibility is needed at local level.

The Bill presents a challenge for local authorities. In some ways the process of conforming to the requirements of CCT was straightforward, if painful, for local government. All that local authorities had to do was to carry out the letter of the legislation. They might want their in-house team to win and they might do their best to make that happen, but the opening of the brown envelope was a neat cut-off point to all those concerns. Failure to win was the fault of the brown envelope. The authorities' job thereafter was to adapt to reality after the envelope. Their creative urges could be channelled into methods of subverting the process, but little else.

Best value, however, challenges local authorities to forge a relationship with their service providers over a long period. The service providers may be the in-house team, an external provider or a voluntary sector organisation that does not operate for profit. The duty that best value places on a local authority is to work on service provision together.

The work of preparing and allocating contracts has a direct bearing on what happens afterwards and over a long period, because there is no brown envelope cut-off point. The local authority must be responsible for the consequences of its own decision making prior to allocating the contracts. That gives local authorities the opportunity to think carefully about the best combination of provision for the local community. The Bill states—in clause 6, I think—that communities should be involved in deciding and evaluating, making that process an important part of the overall success of best value.

That is a great step forward from the narrow focus of CCT, which was almost exclusively targeted on the idea that the market rules, that there was no such thing as a public service ethos, and that the only benefit that communities wanted was to pay less for fewer services. The claim for CCT was that the market would inevitably deliver a better service at a cheaper cost, if only it were allowed to.

At the beginning of my contribution I referred to the deep ideological nature of CCT. It was an ideological instrument derived directly from that snake-oil doctor of the far right, F. A. von Hayek, who took the extreme view that the pricing mechanism would solve every problem in the market, if only it could be left to its own devices. The claim for CCT was along the lines that von Hayek suggested: provided every impediment to the operation of the market could be removed, service improvements would automatically follow. In reality, that has not happened. Overall, there is little evidence that CCT has worked in the way in which its framers originally claimed that it would. It is interesting that the hon. Member for North Essex (Mr. Jenkin) should claim overall headline savings of 6 per cent. on CCT costs. I imagine that he took that figure from the executive summary of the Walsh and Davis study of 1993. But if one reads the report as a whole, the reality, even in that report, is rather different.

There is evidence that savings, where they have occurred—Walsh and Davis make this clear—have largely been through savings in specifications, driving down conditions of service, or in labour casualisation, all of which have an effect on the quality of service offered. It is no accident that the previous Government systematically resisted the application of the Transfer of Undertakings (Protection of Employment) Regulations 1981 to CCT contracts. An acceptance of their terms would have largely removed that hidden saving mechanism for external contractors. The evidence from many contractors is that they specifically bid for contracts because they knew that they could cut corners and costs over and above the contract terms in order to make a profit from a competitive bid.

There is some evidence of the discipline of CCT developing more service-oriented approaches by direct labour organisations, but, with hindsight, it is not clear that other developments in local government could not have achieved that outcome.

Set against that is the real evidence of the cost of preparing and policing tenders—the so-called transactional costs. Again, Walsh and Davis estimated those to be some 7 per cent. of each contract each year, but there is also evidence that savings vanish once a service is re-tendered after four years. Studies more recent than that by Walsh and Davis suggest that at the second round of tenders, especially if the local authority in-house team has been knocked out in the first round, savings start to disappear as costs rise and as cartels start to organise the service among themselves.

Evidence of the cost of monitoring the service suggests that the client side, where a strict comparison can be made, has a 30 per cent. or similar increase in its cost compared with the cost of servicing contracts prior to CCT.

Also present, but less easy to evaluate, is evidence of the breach in the perception of the local council—perhaps the most important although the least tangible point—as providing a responsive service to the community; the loss of the ability to amend and adjust to suit local needs. If a contract did not specify a service at the time of allocation, that was it. Local authorities simply told one to come back when the service was re-tendered.

There is the story of the ducks—sometimes described as the Barnet ducks, although I may be doing that authority a disservice—which allegedly died during the winter because whereas the park keeper had once fed them informally, the new contractor had not received a specification requiring him to do so. That may be a little apocryphal, but it illustrates the widespread problems that contracted services posed to the good relationship that should exist between a council and the community that it serves.

That will change with best value. Local authorities must be efficient, but they must also be able to talk about efficiency in the common-sense way in which most people refer to it—what is the best overall outcome taking into account the combination of factors that affect it. Of course, best value needs to be monitored and measured. The public have a right to expect the best from their local authorities, and they need tools to find out whether that is the case. I do not accept that the public will not be able to take part in decisions on local plans or to judge a local authority's service provision on the basis of what it said it would do. In principle, that is a fairly easy concept for local people to grasp, and I am sure that they will.

The Bill provides for a continuing involvement of the Audit Commission in that task. It will be a more complex task, since the mechanical measurement of performance will no longer suffice. For example, Postman Pat effectively served the community of Greendale by delivering medicines, pulling sheep out of hedges, alerting the emergency services when people were in distress, and so on. But he carried a cat in his post van, and under CCT he would have been sacked on the spot for inefficiency in delivering the post. Under CCT, the post may simply have been collected from the office in the centre of Greendale and there would not have been a Postman Pat at all.

Mr. Bennett

E-mail.

Dr. Whitehead

Even e-mail.

The Audit Commission will need to measure in the round and produce indicators that reflect that. Therefore, it will need to consider community health. It will have to ask whether the community is working better as a result of the way in which services are delivered. I am delighted that some measures will be set in terms of delivery against community expectation. To measure that is a further challenge. It will produce a different way of organising performance indicators from the mechanistic approach of the previous Conservative Government. The Government will need to ensure that those more difficult three-dimensional performance indicators are robust. I am sure that work will be needed to ensure that that is the case.

We will need to ensure that those technical measurements and the consequences of the removal of crude capping work well, and that is a matter for detailed consideration in Committee. However, I welcome the Bill on Second Reading. It demonstrates that the Government are willing to enter into a partnership with local government where the proper roles and responsibilities of each are understood. That is a great achievement compared with the trench warfare of centralism—which I know from my own experience—which the previous Government decided was the lot of local government in the United Kingdom.

7.46 pm

Mr. John Hayes (South Holland and The Deepings)

My hon. Friend the Member for Wantage (Mr. Jackson) invited us to go back to fundamentals in considering the Bill—what we want from local authorities is the context in which the Bill is being debated. Before doing so, I want to deal briefly with some comments made by the hon. Member for Southampton, Test (Dr. Whitehead).

Essentially, the misunderstanding in the hon. Gentleman's contribution was that he failed to recognise that CCT was based on an analysis of process, not outcome. The worry that some of us who value local democracy have about best value is that not just the process but the outcome will be defined, not by the local people, because the accountability will not be first and foremost to them, the recipients of the service—although I accept that consumers and electors are not synonymous—but by an outside agency, in this case the Government. That is the essential difference between CCT and best value. It is a difference and a concern which has been raised by the Local Government Association.

I come now, in the spirit initiated by my hon. Friend the Member for North Essex (Mr. Jenkin), to the fundamentals. We need to see the Bill in the context of our vision of local democracy. Local government is a key part of our democratic infrastructure, but only if it is in the tradition of local self-government, not if it is an agency for central Government. That may seem self-evident. Surely we all recognise that local government is important democratically in a number of ways. It is important because it is the first interface which most people have with the exercise of political power. It is important because it helps to provide the framework of our political parties which, in a sophisticated democracy, are themselves crucial to good government. But it is also important because it provides an alternative means of delivering political ideas, of exercising political power; not a competitive means to this place—this Parliament is sovereign—but an alternative means, an alternative forum for different ideas, a different focus for power, a different focus for a distinctive view of how services should be delivered in a local community.

Sadly, although that may seem self-evident, it has not been a view shared by many national politicians since the war. It is easy to forget that before 1945 core services, such as electricity, health and water, were delivered by local government. The drift has been one way since then, and it has been away from local democracy and local government. Politicians of Governments of all parties have failed to trust local government with the power that it needs to deliver the sort of distinctive exercise of political authority that I mentioned earlier.

The tradition of people making a national name in local government before entering Parliament has also largely been lost in this country, although it still exists in many other democracies—France springs to mind. I say that it is lost because it was once the norm here. One thinks of the Chamberlains in Birmingham or Herbert Morrison in London, who became national figures in local government before they made their names in Parliament. That, loss, too, has had an effect on the way this place sees local democracy. If we accept my initial premise—that local government is an essential part of our democratic infrastructure—we must have the courage to allow local authorities sufficient power and finance to govern not only effectively, but distinctively.

There must be sufficient flexibility to allow innovation and diversity in different authorities. Audited performance plans and unprecedented levels of intervention by the Secretary of State raise legitimate doubts about the creation of vanilla-flavoured local government, constrained by a combination of rigid finance and uniform standards dictated from outside the locality. That will endanger the concept of genuine choices being made locally about the distinctive exercise of political authority. Such intervention is based on the bogus notion of equity, as my hon. Friend the Member for Wantage pointed out, but also on the equally bogus notion of comparability.

The idea that there can be any useful purpose in having nationally uniform targets to compare local authorities in urban areas with small authorities in remote rural communities is nonsense. There is no good logical reason for uniform targets across such different types of local authority. It is as nonsensical as having uniform targets for different types of business; for example, by comparing a fanner with a person making soft drinks. It is a bogus notion, but a powerful one, and it is reflected both in the Bill and in the explanatory notes.

Annual performance plans across authorities must be different in style and content; they should reflect local needs and also differing local political priorities. There has always been a tension between Parliament and local government, but the Bill will result in a degree of tension between the Secretary of State and local government that has never existed. The Bill specifically identifies the extension of capping through the idea that it can be applied over several years, and that extension will further prevent local authorities from developing and financing distinctive plans.

How can the Bill be anything but counter-productive in terms of attracting the best people to local government—the most innovative, dynamic and imaginative people? Who would go into local government, if all they could do was to go through the motions, conforming to some nationally agreed plan and set of targets? The Bill runs counter to the objectives laid down by the Government in various documents on local democracy about encouraging the involvement of good people in local councils early in their lives.

Few people could argue with the principle of best value that underpins the Bill and is central to the delivery of its stated aims of economy, efficiency and effectiveness, but the target-setting, measurement and consultation must be set, led and delivered locally. Local authorities must be more than simply agencies of central Government. The Bill is based on the view that the problem of local government is that standards of service are too variable, but its solution is prescription. Instead, the solution should be to enable local government to become more accountable to its electors, who will vote for best value when they recognise the relationship between what they pay and the quality and level of service that they receive.

There are examples of that from around the country, both in Labour and Tory councils, which are recognised as providing a good service. They achieve genuine levels of local enthusiasm and, accordingly, generate local support, but, too often, local elections have become simply a vehicle for people to exercise judgments about particular Governments or political parties. Bland, uniform and mediocre local authorities, largely unaffected by local decision making, will not enhance local democracy; they will not encourage greater turnout at elections, nor attract better people to serve their local communities, but will damage and weaken local democracy. At the very best, the Bill is a missed opportunity. At worst, it exacerbates many of those problems and will further weaken our democracy.

7.55 pm

Dr. George Turner (North-West Norfolk)

It is interesting to follow a political neighbour, if not a political friend. The views expressed by the hon. Gentleman are a long way from how I understand the Bill.

I warmly welcome the Bill and the role that it has to play. Although it has been criticised as too narrowly financial, the House should recognise that it is part of a package of measures designed to address the real needs of local government and local democracy. After 20 years of experience in local government, I cannot share the rather apathetic views of some hon. Members—surprisingly, even some of my Labour colleagues—who believe that turnouts of 20 or 30 per cent. at local elections are somehow acceptable.

I am delighted that we are addressing the need to rejuvenate local democracy. The one point on which I agree with the hon. Member for South Holland and The Deepings (Mr. Hayes) is that local democracy will be healthy when local people actually vote on the issues affecting their communities, rather than acting as a national opinion poll on the Government of the day. The tasks are challenging, but we all have an interest in supporting them.

In welcoming the Bill, I was amused to hear, if not the deathbed repentance, then the repentance from the coffin of the Opposition, because after living through 18 years when their actions showed us what they believed in, it was almost like being in a dream to hear what the hon. Member for North Essex (Mr. Jenkin) had to say about local government. The Opposition must think that the electorate are fools if they really think that their actions will be seen as anything other than electoral posturing and the search for short-term political advantage. I genuinely hope that the Opposition will develop their views, as we need to be united nationally on some issues if we are to achieve proper local government.

My hon. Friend the Minister for Local Government and Housing was often accused of being on message; she was on manifesto. The Bill delivers what I was elected to support and I shall enter the Division Lobbies with pleasure tonight. The Bill has been criticised: people have asked whether it will work. The House considers legislation, especially secondary legislation, in arcane and out-of-date ways, but I do not believe that that is a good reason to prevent the Government from having good management techniques. That is a danger in the arguments, especially those of the Liberal Democrats, about secondary legislation. One of the lessons that I learned quickly in Parliament was that Governments are rightly judged as succeeding or failing not by legislation, although that is an important element, but by how they use legislation. Decisions made by Ministers determine whether the country prospers and the people benefit from a change in Government. We shall not know how the Bill will work until Ministers use the powers that it gives them.

My hon. Friend the Minister for Local Government and Housing, probably through the voice of the Deputy Prime Minister, gave the biggest single boost to local government finance for my county council in 20 years. That boost was given under some of the same legislation through which we had received some of the worst settlements during the previous four or five years.

Mr. David Heath

I represent a part of the country that was capped by the Government after an election that had produced an overwhelming majority in the county for higher expenditure. Will the hon. Gentleman reflect on one phrase in his speech: management techniques? Is not that the crux of the matter? The Government are still determined to manage local government instead of providing for local autonomy, and Liberal Democrat Members will not stand for that.

Dr. Turner

I entirely disagree. Good management is not about telling everyone what to do, as the hon. Gentleman seems to think; it is about delegating, and ensuring that decisions are made at the right level. That, however, does not mean that the buck will stop lower down. Ultimately, it will continue to stop with Ministers.

In running the nation, we want to get the balance right. We want to be clear about the decisions that are made, and about who is responsible. That is what the electorate need. Nevertheless, I accept that, in a country the size of ours and given our system of government, Ministers will want to reserve unto themselves some powers that reflect the fact that that is where the buck stops. I know—we all know—that, in the case of certain things that happen in local government and are experienced by the local electorate, Ministers will get the blame, and I have no doubt that Opposition Members will try to heap that blame on them when the time comes. One of the features of local government today is the fact that we have not yet achieved the right balance between Government and local decision making in terms of powers and the language that we use.

One of the difficulties that the House will experience in discussing local government is caused by the variety of quality to be found in local government. Local government is not black or white; it genuinely comes in all sorts of shades. During the 20 years I served in local government, I saw dedicated councillors who were in touch with their electorate, properly representing the views of that electorate and the interests of their community, acting with knowledge and appointing officers who gave good professional advice. I saw councillors who were keen to ensure that the best information technology techniques, and the best ways of running organisations, applied in their authorities. However, I also saw councillors who were more interested in posturing, uttering slogans and, in fact, abusing local people—more interested in academic argument that might, at times, be more appropriate in the Chamber—than in delivering local services. I believe that some of the difficulties facing the Government when they draw up a Bill such as this are caused by the wide range of performance, whether at council or officer level.

The difficulty and the danger are posed by the fact that we need to enact legislation to deal with the needs of the people who are unfortunate enough to have the worst councils, while ensuring that the rules do not discourage or prevent innovation and the progress of the very best. It is in that regard that Ministers must use their judgment.

As one who was a member of a local authority, I am well aware that compulsory competitive tendering wasted money. I sat on committee after committee which saw that the total cost to the public purse was larger than it would have been without CCT. However, I am glad that the Government are not saying simply that they will turn the clock back. Twenty years ago in local government, there was much to be challenged. The Bill addresses the need to achieve value for money, which will challenge councils to ensure that modern approaches and tools such as information technology can tell us what constitutes best practice.

It has been suggested that the Government are trying to create uniformity. I am well aware of the richness and variety of the ways in which local government is currently administered. By no means is a single formula applied locally, and I do not think that there is any intention that should happen. We should suceour the rich experimentation that is currently taking place, and I do not think that the Bill does anything to prevent that; but we must learn the lessons of those who experiment. Experiments that fail must be abandoned, and when experiments succeed, that best practice needs to be propagated in local government. That, I think, is the underlying philosophy of the Bill.

My experience as a Member has been coloured by the fact that my office is opposite that of Kings Lynn and West Norfolk borough council. Because of that proximity, I have felt a keen interest in the doings of the borough council, and I am delighted to note that, rather than feeling that it will pushed into something by legislation, the council has addressed the issue ahead of time. I believe that it was the first public body in the country to gain an "investors in people" award. It has received three charter marks, and a number of its services are benchmarked to ISO9002, a quality standard for service delivery.

Two years ago, the council made a commitment that it would work to the British Quality Foundation's business excellence model. That commitment will underpin its service review. It said that it would review its services in three years. I consider that a challenging objective, and I look forward to receiving the report, in a month or two, on its housing, financial, IT and refuse collection services for the current year.

I think that there is a broad welcome for the Bill. I believe that many people in local government feel that shackles have been removed, and that they can work in a different way with a different Government. However—and I speak as one who complained about capping when I was a councillor—we must face the fact that the slogan "Give them the money, Bernie", implying that the Government should provide the vast majority of the money and then let local authorities get on with the decision-making and the spending, is not a reasonable model.

The last Government treated local authorities as though they were in the doghouse. Certainly, the rules were simple enough for a dog to understand. It is possible that the present Government are treating local government as something more like an adolescent. As children grow older, the rules become more complicated, but they are still there. I hope that we shall see an evolution and a development in local government. After 18 years of its being denigrated, blamed, hit, limited and constrained, it will take a few years of the present Government to change the backdrop. I hope that we shall see a relaxation in the minds of Ministers, at least, in terms of regulation and control; and if the measures that the Government are introducing in regard to democracy succeed, I think that we can further empower the process of local accountability. It is not there yet, though, and I understand Ministers' concern about capping.

We must see progress. Ultimately, the quality of those in local government will determine what happens. The quality of the officers is clearly critical, but more important than that is the quality of the members, because they determine who the officers are. They need to be given a task that is worth while and a time scale in which to perform it, and they need plaudits as well as brickbats.

I believe that we are on a sensible agenda, but it will take time. We shall not know the answers until after we have passed the Bill—which I am sure that we shall—and see with what wisdom and success Ministers can use it. Undoubtedly, many of the problems of the past decade or so have been caused by the way in which Ministers who are now Opposition Members misused, and abused, their powers.

8.9 pm

Mr. Adrian Sanders (Torbay)

We have heard very good speeches from the Opposition Front Bench, and interesting and well-put speeches from the Government Back Benches. We heard a good speech from my hon. Friend the Member for Sutton and Cheam (Mr. Burstow); but I was somewhat disappointed by the speech of the hon. Member for North-West Norfolk (Dr. Turner). At one point, I thought that he was arguing against local elections, although I felt that I had a great deal of common ground with him when he intervened earlier.

The Bill, in effect, transfers power from the market to Whitehall, bypassing residents on the way. It simply confirms that local government in England is exercised only at the discretion of Whitehall and, in particular, the Treasury. Encouraging consultation while preventing local government from meeting the needs that may be highlighted is a bit like an adult telling a child that the siren indicates that the van has run out of ice cream. The principle of self-governance is not shared in government because the Government and their so-called third way do not trust the people.

Gladstone once said that liberalism is trust of the people tempered by prudence, and conservatism is mistrust of the people tempered by fear. New labourism appears to be distrust of the people tempered by focus groups. What is the Bill all about? The answer is in the explanatory notes on the effects of the Bill on public sector finances: The improved efficiency and effectiveness in the use of resources which result is expected to deliver significant costs savings across the board, as well as improvements in service quality. The Bill promises us something for nothing. We have heard that so many times. The notes also say: There will be some costs of compliance with the best value provisions of the Bill which will fall upon authorities, and which may involve them incurring new costs… Such costs will be expected to be contained within existing budgets"— so there are no new resources with the Bill.

The council tax provisions will enable the Government to restrict excessive increases in council tax. That will control total revenue expenditure in England of over £50 billion and in Wales of over £2 billion, so it is about control of expenditure—something for nothing, no extra resources, central Government control.

How does that chime with the Government's ratification of the European charter of local self-government? How can a Government who commit themselves to the importance and independence of democratically elected government propose hit squads and further powers for Whitehall to intervene—nationally set performance standards, central powers of reserve to cap locally set budgets, new audit and inspection arrangements?

The Minister said that the Bill was pushing powers out of Whitehall to the town hall, yet there are 27 new central powers in the Bill. If the Minister's claims were to stand up to scrutiny, she would have been introducing a Bill to give local government the power of general competence and a system of proportional representation for local elections, where the ballot box, not the Secretary of State, would be the final arbiter of performance and tax raising.

The hon. Member for Wantage (Mr. Jackson) was right when he described the measure as an example of the mistrust of local government, a mistrust that has led to a lack of transparency in local government finance, leaving local taxpayers confused over whom to blame for cuts, tax rises or waste; but the most pernicious aspect of the Bill is the council tax benefit clawback. The poorest areas are hit the hardest. As a national newspaper put it the other weekend: The real issues are local choice and local democracy. Labour's scheme is capping in all but name—and indeed treats poorer councils worse than the Tory shires. The new measures are mostly contained in regulation changes, rather than legislation, and so will be confined to a House of Commons Committee. But the powers necessary to enact the reform are in the Local Government Bill. The Observer hopes that some honour is left among New Labour's back-bench MPs. If this was too much for Mrs. Thatcher, it should certainly be too much for New Labour. I fear that the Division will prove that it is not.

8.14 pm

Ms Oona King (Bethnal Green and Bow)

I particularly welcome the opportunity to speak in the debate, given the subject of my private Member's Bill, the Local Authority Tenders Bill, which went through in the previous Session—or rather did not go through. During nine months of negotiations with the social partners, I spent a rather torturous time looking at ways in which we could come to an agreement to push forward best value, which the Minister has now brought before us with the comprehensive package in the Bill, which I welcome.

For obvious reasons, therefore, I would like to restrict my remarks to clause 17. I know that all hon. Members always start by saying that they are going to restrict their remarks and then talk about everything. I will try not to do that.

Clause 17 allows the Secretary of State to change the list of non-commercial considerations that the local authority can take into account when putting a contract out to tender. Before we get too technical, I would like to outline what that means in plain English. Previously, under compulsory competitive tendering, that was not possible. A local authority was able to take into account only the lowest bid essentially. In my experience, that led to a Dutch auction that favoured cowboys, to the extent that many employer organisations now feel that CCT is a great disadvantage and of disbenefit to them; reputable employers are put at a disadvantage. Disreputable employers are able to reduce terms and conditions of employment, reduce wages and thereby get an advantage and win a contract.

That often harms the employers themselves. We have seen numerous instances of employers going bankrupt after they have gone for the cheapest bid that they could and then were not able to deliver the service. The local authority and, most important, the public also lost out.

I would like a move away from the dogma. Hon. Members on both sides of the House have been guilty on occasion of wallowing in dogma. The Bill represents a move from away from that. As the Minister has clearly put it, it is not the means; it is the ends. We want to look at best value. Whoever is able to provide best value and fair employment practices as well has an absolute right to win contracts.

I do not wish to see the previous bias towards the private sector replaced with an unthinking bias towards any other sector, be that public or otherwise, because the most important point is about quality and standards. It is about how we deliver the service, not who delivers it. I hope that there might be some common ground there.

Mr. Nigel Evans (Ribble Valley)

As ever, the hon. Lady makes it sound oh so reasonable, but clause 17 could be a ticking time bomb because it allows the Secretary of State to re-introduce dogma if he likes and all sorts of non-competitive, dogmatic policies to ensure that, in many cases, private industry is discriminated against.

Ms King

The hon. Gentleman says that the issues are dogmatic. May I raise some of the particular ones to which he refers, such as equal pay? In my view, that should not be difficult—[Interruption.] You are going like that as if to say—

Mr. Deputy Speaker

Order. I am not going anything like that.

Ms King

Thank you Mr. Deputy Speaker. The hon. Member for Ribble Valley (Mr. Evans) was making an indication as if to say that it is unreasonable to suggest that a local authority should seek to uphold good employment practices with public money. That is an issue that does divide the House. Labour Members believe that it is the responsibility of a local authority to uphold good employment practice. I make no apologies for that.

During the negotiations with the social partners, the CBI agreed wholeheartedly—

Ms Armstrong

Some Conservatives said earlier that the CBI is made up of a bunch of socialists.

Ms King

It is true that the Conservative party appears to label the CBI socialists, communists or worse even. The social partners agreed on areas where such interventions would be possible and where they would be sensible and in the interest of providing and delivering a better service. I fail to see why the Conservative party finds that so inimical to business because business itself does not. During the Committee stage of my private Members's Bill, I had meetings with many representatives of the business community and I was struck by the fact that they said, "We do not want cowboy contractors to be able to put in a lower bid and cut us out of the loop so that we lose business or go out of business." It was a bizarre "Through the Looking Glass" experience because Conservative Members were arguing against dealing with that. It was rather strange.

The hon. Member for North Essex (Mr. Jenkin) said that he was proud of CCT and perhaps the hon. Member for Ribble Valley (Mr. Evans) shares that view. I wonder whether they are proud of the fact that the courts have ruled that CCT was discriminatory towards women. It was clearly proven. I wonder whether the Opposition Front-Bench spokesmen take issue with the court's ruling. That is an important point but, as is often the case, sadly, there is not a single woman on the Opposition Benches.

I now want to talk about the third way. I am waiting for Conservative Members to groan because they did so very nicely earlier on. Unfortunately, the notion of the third way is often met with derision. I used to be a trade union officer and, during negotiations with employers, when we were unwilling to find any common ground we both lost out. I cannot understand the refusal of certain Conservative Members to accept that in the past we have said, for example, that the public sector is good and the private sector is bad and that we should move away from such views. That is what the third way means and it is clearly incorporated into the Bill. I welcome that and I hope that, at some time in the future, Conservative Members will also welcome it.

There is a coincidence of interests between employers and employees. As I have said, reputable employers and many employees suffered under CCT. Changing that system will benefit both those groups. It is about building on what has been termed the new employment agenda, which explicitly recognises that the way in which employees are treated has an impact on the quality of the services provided to the community. If one cares about the service that the community receives, hopefully one would care about building upon a new employment agenda, which has been outlined in the memorandum from the social partners. That memorandum states: Our approach is based on a determination to construct a new and co-operative relationship between public and private sectors. That is the third way. It is not a media soundbite. Some people ask what it is. They ask whether it is directions from the motorway or instructions from "The Kama Sutra". There is a great deal of confusion. [Laughter.] I will not go into the various positions one might take on that, but it is straightforward. It does not rest on the shallow grave of a media soundbite, which some people might suggest. In the new culture of partnership, we recognise that the old adage of an eye for an eye leaves everybody blind. Under CCT blind stupidity reigned and all the key actors were set against one another.

Clause 17 allows the Secretary of State to change the list of prescribed non-commercial considerations. All the social partners agree that the current regulations must be reformed. They have already agreed on a list of areas where it would be legitimate to ask questions about a contractor's employment record and are currently discussing the details for putting that into operation.

Mr. Evans

As somebody who has never thought that the third way had anything to do with "The Kama Sutra", I must say that the hon. Lady has obviously given this much thought. Why cannot this be put into the Bill so that it can be properly debated in the Chamber, in Committee and in the other place? If the Government already know what the non-commercial activities are to be, let us have them up front and in the Bill.

Ms King

When the social partners spent more than nine months seeking a negotiated agreement on what could be put forward and the Government have said that, in consultation with the social partners, they will decide on the list, I cannot see any merit in the hon. Gentleman's objections. The areas on which the social partners have agreed include quality, training, health and safety, disability and racial equality, equal pay and gender equality. Those are all issues which, no doubt, make the Opposition squirm. The social partners have recognised that those areas have a valid place and I hope that Conservative Members might recognise that.

In essence, we must ensure that the tendering process is not used as a barrier to higher quality services, fair competition or employment protection. We need to place the public interest first. That is something that, on certain occasions, both sides of the House have failed to do. It is what we are trying to do now. I commend my hon. Friend the Minister for her comprehensive efforts in this area and I look forward to better public services, enabling the rejuvenation of local government that is so long overdue.

8.27 pm

Mr. Robert Syms (Poole)

There are certain political realities in local government. One is that, the further one is from controlling national government, the more one is in favour of freedom for local government. I listened carefully to the speech made by the hon. Member for Torbay (Mr. Sanders). I agreed with much of what he said until he began to talk about proportional representation, which is not a panacea to bring about improvement.

The Government took office with an agenda stating that they must get rid of competitive tendering and some of the other dreadful things that the Tories introduced, such as capping. They have suddenly realised that if they do that, a degree of control will slip. As a result, those things have been redesigned. The chains may have been taken off, but other chains have been introduced to replace them.

My hon. Friend the Member for North Essex (Mr. Jenkin) noted earlier that there were 27 new powers in the Bill. That is instructive. This is a technical Bill that could be used by a future Secretary of State to control local government however he wished. The criteria are more general than under the previous Government, when issues were more overt and up front.

I am proud of my 14 years service in local government. Local government is a good institution with some capable people. It is probably as efficient as Whitehall and national Government and probably scrutinises more. I spent hours in committee crawling over relatively small sums of money. That level of scrutiny of Government expenditure is not evident in this Chamber. Local government is sometimes unfairly run down, even by my party. It has a good reputation.

Many people have an affinity with their local authority, particularly in old established boroughs such as Poole, which has celebrated its 750th anniversary. There is also strong affinity with local government in many shire counties and metropolitan areas. The Government should pay special regard to that. I am not a great enthusiast for regional government, because it would be an artificial creation. I would far rather have more power passed down to local authorities, allowing people to make mistakes on occasions, but to make them in their own communities. That would be better than creating artificially large regional government institutions.

Compulsory competitive tendering was helpful for those in local government who wanted more efficiency. Before the Local Government Act 1988, service standards often did not have to be specified by local government officers. The Act made them think carefully about the service that they were providing and set a market price.

Market prices are not the be all and end all, but it is useful to know what things cost when going out to tender. CCT often generated savings. Sometimes it did not, but it is reassuring in any form of government to test the price of a service. In rural Wiltshire, where I grew up, local authorities, under whatever party, tended to take a minimalist approach to local government and were not highly overstaffed, so the savings tended to be smaller. However, there were many large urban authorities with large direct labour organisations, some of which did not even have to prepare proper accounts before CCT regulations. Even after the regulations, they found it difficult to do so. They were living off the rate payers and rent payers and sometimes providing very bad services.

A great deal of progress was made under CCT, but perhaps there is an argument for moving on. However, all that one can say about best value is that it sounds like something that we might find in a supermarket, but none of us knows what we shall get from it. To know whether best value will work, we have to see the detail. We have not seen it yet. It is a pity to overthrow the CCT regulations and go for best value, when we may not find out important details until the regulations are drafted.

It will be difficult to measure economy, efficiency and effectiveness without a regime for testing the price. When the details of best value are made known, I hope that there will be more tendering than there currently appears to be. One Labour Back Bencher said that best value was verbiage. That is fair. We shall have to wait and see how the Government fill in the details.

Labour had a manifesto commitment to abolish crude and universal capping. I am not sure that they have done that. The details of the Bill suggest that the new system will be worse, because we are moving towards a more secretive, arbitrary capping system. The big advantage of telling authorities their capping level in advance is that they can discipline themselves to keep within it. If authorities are not told, more of them are likely to be capped because they will step over a mark without knowing that it exists. It is a bit like having a blind auction or an auction of promises, with local authorities guessing where the level is, rather than knowing.

That will lead to all sorts of problems. Making the system less overt will take some of the fairness out of it, because authorities will not know where they stand. Because the criteria will be more general, people may not understand why one authority is capped and another is not. Less clear criteria will lead to more argument in local government. Authorities will be tempted into breaking what will retrospectively be deemed the cap, which will lead to all sorts of difficulties, such as rebilling.

The Conservative Government went through a steep learning curve on capping. They moved away from capping councils after they had set their budget because that forced them to rebill. I fear that the new Government will have to learn some of the same lessons that the previous Government learnt.

I am not sure that we shall get much further forward with the new capping regime. Where people stand will not be as clear. If there is to be a capping regime, it is important that treasurers and officers can advise their members on where they stand with reasonable certainty. I have sat on a local government finance committee and voted to spend up to the cap several times because we knew what the limit was and it seemed sensible to spend up to it. It was a pity that if we underspent we could not roll over the savings year by year. That gave no incentive to make savings.

The proposal for capping over more than one year could well cause problems, particularly if we move to annual elections. If control of an authority which was capped for years one, two and three changed within that period, an authority under different political control would inherit the capped budget of its predecessor.

The proposal under clause 24 to make an authority pay the excess council tax benefit is also fraught with difficulties. One has only to look at the back of the Library brief which sets the various options. The Government will very much regret that proposal. It is extremely complex and is likely to cause great difficulties in future. I am sure that it will be examined in great detail in Committee. As my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, the nearly poor could end up subsidising the poor, particularly in boroughs with houses in categories A and B such as Pennine towns; that could prove disastrous.

My hon. Friend the Member for North Essex said that he supported beacon councils. I have great reservations, however. The Bill refers to the setting up of an independent advisory panel. Would it be independent in the same way as the Jenkins commission or would it be independent from the Government? Again, we will come back to a subjective view about what is and is not good in particular authorities. Council officers will invest much time and effort in trying to win beacon council awards which may give them some latitude in respect of their finances. Although we must encourage best practice, I am not sure that that is the best way to do it. I was never a great one for charter marks either as I am not keen on handing out lollipops. We must try to ensure best practice across the board without being too prescriptive; I am not sure that beacon councils are the best way to do that.

Finally, the Government have started to learn that they do not want to lose some of the powers that the previous Government had. We have to see how best value turns out as we do not have the details. The capping regime in the Bill is worse than that introduced by the previous Government because it is less obvious to local authorities how it will work and one or two provisions in the Bill will give the Government headaches. I do not know which of my right hon. and hon. Friends will be on the Committee, but I am sure that it will be interesting.

8.37 pm

Mr. Gareth Thomas (Clwyd, West)

I welcome the Bill whole-heartedly. It is part of the Government's wider programme to modernise local government. In my view, it strikes the correct balance between local accountability and initiative and an entirely necessary element of oversight and scrutiny by central Government, and, significantly, by the National Assembly for Wales.

The abolition of the inflexible and discredited CCT system and the crude concept of rate capping is entirely overdue. The new duty of best value and the duties to review, consult, appraise and engage continuously in a process of improvement simply mirror good management. Significantly, it is what the public have the right to expect.

To strike a note of criticism about the manner in which the Bill is drafted—I speak as a lawyer—schedule 2 is impenetrably complex. If one is striving towards transparency and engaging with the general public, surely there is a case for simplifying legislation on local government finance.

As the only Welsh Member to have spoken so far in the debate, although there has been an intervention by the right hon. Member for Caernarfon (Mr. Wigley), I should like to stress that the Bill applies not only to England but to Wales. In the context of Wales it is qualitatively different. I notice that the Minister agrees.

The Under-Secretary of State for Wales, my hon. Friend the Member for Cardiff, Central (Mr. Jones), is to wind up the debate, and I should be grateful if he would respond to some points. To my knowledge, this is the only Bill so far directly to provide order-making powers not to the Secretary of State for Wales, but to the National Assembly for Wales—a democratically elected body that is at the forefront of constitutional change not only in Wales, but in the rest of the UK.

I hope that the Bill is the shape of things to come, and it is heartening that it conforms with the spirit of devolution. It is a framework Bill to provide enabling powers, and it is not overly prescriptive. It does prescribe the concept of best value, but there is a public expectation that basic services such as education and social services should be run properly and in accordance with best value.

The Bill is remarkably light on mandatory requirements thereafter. The provisions on performance indicators, reviews, timetabling and—significantly in the case of Wales—intervention and reserved powers are all permissive, and not mandatory. In the context of Wales, the provisions are dependent on the democratic will of the people of Wales through the Assembly, and that is significant.

My hon. Friend the Under-Secretary will know that a key provision of the Government of Wales Act 1998 is section 113, which imposes a statutory duty on the Assembly to sustain and promote local government—a novel concept. That is entirely fitting in a country such as Wales, which places great—perhaps fanatical—emphasis on loyalty to one's own locale and community.

In Welsh literature and history, there is the concept of brogarwch—a dedication to one's milltir sgwar—that is of loyalty to one's locality. Wales is a nation of communities, and it is right that the Government of Wales Act will set up a partnership council between the new tier of regional government and local government. The Bill is consistent with the idea of a partnership council. At first blush it might not seem to be but, frankly, the Bill is permissive and subject to the democratic will of the people of Wales.

How does my hon. Friend the Under-Secretary foresee the partnership council inter-relating in practice with the provisions of the Bill? I agree with the constructive comments of the hon. Member for Poole (Mr. Syms) that much of the conceptualisation behind the Bill depends on good will between central Government, regional government—in the case of Wales—and local government. I will be interested to hear my hon. Friend's comments on that. I assume that the National Assembly for Wales can choose not to make any order-making powers, or to make order-making powers which are different from those which apply in England. Again, that is consistent with the spirit of diversity which lies behind the concept of devolution.

Clauses 22, 23 and 24 are technical measures relating to police authorities and reserved powers in relation to precepting authorities. However, the explanatory notes with regard to clause 24 seem to be inconsistent with the Bill. Is it the case that the Secretary of State for Wales will continue to retain powers relating to police authorities? That appears to be the meaning of clause 22, in which case those reserved powers could be applied by the Secretary of State, but not by the National Assembly, so the position in respect of police authorities would differ from that of unitary authorities. The explanatory notes appear to be somewhat contradictory.

The Bill is part of a programme to modernise local government. Local government has to adopt the role of community leadership. I look forward to the implementation of the legislation and hope that it is not too much to expect that it will herald a new, constructive age of local government. The Bill starts the process of restoring prestige to local government, and I welcome it.

8.45 pm

Mr. Andrew Lansley (South Cambridgeshire)

It is a pleasure to follow the hon. Member for Clwyd, West (Mr. Thomas), although he will forgive me for not following up on the issues he raises that relate specifically to Wales.

I was interested to hear the hon. Gentleman refer to the partnership council: every Government Bill should contain a clause that is specifically dedicated to the establishment of a partnership council, for where would we be in the modern age without the Government's belief in partnership? However, the Government's approach is to assume that the partnership sought through all the various mechanisms will deliver everything because everybody will agree with each other all of the time. It is perfectly obvious that the hon. Member for Bethnal Green and Bow (Ms King) believes that, if people are brought together, they will agree. In fact, the object of legislation is often to require things to happen when people do not agree: for example, the whole point of capping is not to cover situations where people do what they are enjoined to do, which is not to engage in excessive spending, but, in the Government's own terms, to enable the Government to take reserve powers for the occasions when they do not. We are trying to ensure that powers exist to require local authorities to act responsibly when they are moved not to do so.

When the Bill was published, it was interesting to consider it in the context of the White Paper "Modern Local Government: In Touch with the People", because there is discontinuity between the then Labour Opposition's pre-election political posturing and all the rhetoric that led up to the Labour manifesto and subsequent events. After the election, instead of action on the aspects of the rhetoric that related to freeing local government and to sweeping away central Government interference and the excessive legislation introduced by the Conservative Administrations, we get only those legislative measures that serve Labour interests. In the Bill and, no doubt, in future legislation on introducing higher standards and controls over ethics and behaviour in local government, we can see that the Labour Administration's agenda on local government is driven by the requirements of dealing with Labour in local government.

The Government know that, to achieve their objectives in local government as dictated to them by their Labour local authorities, who are still in the grip of their relationship with the trade unions, they have to deliver the abolition of compulsory competitive tendering, but how are they to do that within the rhetoric of fiscal responsibility? They do it by talking about best value. Labour's political rhetoric is that we have to do away with the wicked capping that past Tory Administrations used to prevent local authorities from spending money on services; but the Government recognise that authorities—it will inevitably be Labour authorities—who want to engage in excessive spending will have to be constrained from doing so. Their solution is to bring back control not in the guise of crude and universal capping, but as a mechanism that, in its technical aspects, is capable of imposing a system of capping that is just as detailed and constraining as anything that has been applied by past Conservative Administrations.

Again, we see the gap between the rhetoric and the reality. The rhetoric of Labour is about freeing up local government, but the reality is serving the interests of Labour in local government and recognisingz that Labour local government has deep flaws, which is why this Administration has introduced the Bill.

Dr. George Turner

Will the hon. Gentleman reflect briefly on the fact that Conservative council after Conservative council was capped under the previous Government's regimes? I served on one. Those councils spent up to the cap and that became the norm. The English language was abused, was it not?

Mr. Lansley

Yes. The hon. Gentleman is taking me to a later part of my speech. He will not be surprised to learn that I have difficulties with the manner in which capping regimes have been applied. For example, in recent years, my county council in Cambridgeshire was capped, even under a Conservative Administration. It was capped at the standard spending assessment level, when it had one of the lowest council taxes in the country. In that case, capping was not applied to curb excessive spending.

Capping was introduced because of excessive spending by Labour authorities, but the manner in which previous legislation was implemented led to absurdities, which have constrained local authorities and, as my hon. Friend the Member for North Essex (Mr. Jenkin) said quite openly, the Conservative party does not want that policy pursued in future.

Mr. Jon Owen Jones

May I help the hon. Gentleman? He is saying that the existing capping criteria are crude and ineffective and that they were unfairly applied to his local authority. Therefore, he should support the Government, because we want to remove that crude capping regime and introduce a fairer system.

Mr. Lansley

The hon. Gentleman is trying to help me, but he is directing me to the wrong solution. His solution is not the sort of capping that ought to be applied, as I hope hon. Members on both sides of the House recognise. Capping should be applied for excessive spending in year, rather than be spread over a number of years. If there is to be a reserve power, it ought not to be in the form provided for in the Bill.

The hon. Member for Clwyd, West (Mr. Thomas) said that schedule 2 was excessively complicated, and we know why. There is only one reason. The schedule is designed to give the Secretary of State great flexibility in the manner in which he applies the capping powers. Therefore, we are not talking about predictable reserve powers, which will operate only if local authorities increase expenditure excessively.

I am not trying to write policy and this is not necessarily the best solution, but legislation could specify that the capping regime would be based on a multiple of the increase in council tax at standard spending assessment and that capping would not apply to any local authority that spent within a given margin of the SSA. As we all know, the SSA is not a precise instrument. One of the most objectionable aspects of the regime was that capping was applied at or close to SSA and the Government have proposed in their White Paper that it should apply at or below SSA, which is an absurdity. If there is to be a reserve power, the legislation should specify that the capping regime should not apply within 10 per cent. of the SSA level.

Dr. George Turner

The argument is well worth pursuing because when we try to simplify in local government, we take away local councillors' ability to argue for a particular circumstance. The Government are trying to strike a balance between everything being a special case and having an oversimplified system that lays down one rule for everyone.

Mr. Lansley

The hon. Gentleman has missed the point. I wish that more Labour Members had taken this line as there are reservations on the Government side about the capping powers that the Government propose. The policy is designed to give Ministers—no doubt at their behest, in conversation with officials—the power to do anything that they want at any time.

However, that is not what a reserve power should be. Such a power should permit Parliament to assert that, although there is a case for simplicity, it cannot apply to a large number of authorities except in so far as it sets a boundary beyond which legislation may allow the Secretary of State to intervene. As long as that boundary allows a considerable margin between the cap and the average rate of council tax increase in a given year and that year's standard spending assessment, it is possible for most local authorities, year by year, to remain unaffected by the capping regime. That is what we want, but the Bill will not achieve it. Instead, it will mean that, every year, every local authority will contemplate the character of the capping criteria. They will even worry about the possible capping criteria in the following year that may bite back retrospectively on their budget decisions.

I shall return to the matter of the best value regime. The implication of the contributions from Labour Members is that there is a debate about who is in favour of best value. We are all in favour of it, which is why I find it astonishing that Labour Members should say that Conservative councils tell them that they support best value. Of course Conservative councils say that: I have a letter from the Conservative Cambridgeshire county council that makes it clear that it supports best value. According to the district auditor, that council is doing very well: the wide range of measures that it has adopted has put it at the leading edge among authorities implementing principles associated with best value.

There is no surprise about that. Conservative administrations in local government have led the way in creating best value. As my hon. Friend the Member for North Essex said, best value is simply an extension of compulsory competitive tendering. If one thinks of best value as being both baby and bath water—with the baby being competition, or CCT—what makes this part of the Bill objectionable is that the Government, far from chucking out the baby with the bath water, are keeping the bath water and chucking out the baby.

A core element of local government activity must be exposed regularly to the harsh rigour of competition through competitive tendering. Otherwise, competition will be lost, by stages, within local government: even benchmarking—by which authorities compare their success with that achieved by the best 25 per cent. of local government practice—will not secure the same best value that could be achieved in a rigorous competitive regime.

The Minister talked about the four Cs—challenge, comparison, competition and consultation—but I fear that we shall find that Labour authorities will not pursue most of them. They will undertake consultation, but they will not challenge Labour authorities' presumption that the more services provided, the better. They certainly will not engage in competition and all comparisons made over time will be confined to local government rather than between the public sector and the private sector.

I share the worry expressed by my hon. Friend the Member for Poole (Mr. Syms) about beacon councils. Performance indicators must be focused on efficiency, cost and value for money if the concept of beacon councils is to have validity. However, I suspect that some of the elements in those performance indicators will be directed too much towards compliance with Government prescription, given that the White Paper often equates quality with volume of service provided. The result will be that beacon councils will be relatively high-spending authorities engaged in relatively high-volume activities and that they will then be rewarded with additional money from Government for precisely that reason.

I have a final point about performance indicators. The White Paper proposes that quality should be one of the performance indicators imposed by Government, but that should happen only when local government is carrying out a function prescribed and required by central Government. If quality performance indicators begin to intrude into services which local government has the discretion to provide or not, central Government will be prescribing what happens inside local government and not allowing local government to strike the essential balance between the provision of service and the cost to the taxpayer. Central Government should, as far as possible, be kept out of that decision. Quality performance indicators should be limited to those activities which it is prescribed in statute that local government must undertake.

I agree with my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) that the Government simply have to understand that council tax benefit limitation will hit hardest in circumstances in which there are many low-value properties and many benefit recipients. I cannot understand why the Government are blundering into this problem. There is an additional difficulty, which I hope that Ministers will consider carefully and try to avoid. It arises in relation to authorities that have been very low spenders and are spending below their SSA. In increasing their council tax, often as a result of a decline in their revenue support grant, authorities may incur a penalty as a consequence of the council tax benefit limitation even though they are spending below the SSA. As it happens, the worst example is South Cambridgeshire, which will incur a penalty because the council tax benefit threshold is 23 per cent. below the SSA. There is no rationale, even on the sharing of responsibility criterion to which the Minister referred, for a local authority incurring a penalty if it is increasing its council tax, but spending that far below its SSA. I hope that, when Ministers look at the detail of the Bill, they will recognise that problem.

I am disappointed in the legislation. It was perfectly possible to introduce a Bill that retained CCT but put it into a wider context of best value. Such a Bill might have secured a higher degree of support on both sides of the House. It was perfectly possible to introduce legislation with a genuine reserve power in relation to capping rather than the wide discretion that Ministers seek to give themselves.

9.2 pm

Mr. David Crausby (Bolton, North-East)

I am one who has always believed that the genuineness of democracy depends on how close it is to the people. The nearer democracy is, both ideologically and geographically, the more genuine it is. The more power and decision making wander away—to London or, even worse, to Brussels—the more a democracy fails to represent the people who have rightful ownership of it. That is why local government is so important. That is why it must be made to work, regardless of the local government model that we use. If one form of local democracy does not work, we have no alternative but to keep switching until we find one that does. It is community representation that matters, not the bureaucracy of local government.

Local government election turnouts that sink below 20 per cent. obviously do not help. They send a clear message from the more than 80 per cent. of the electorate who choose not to bother to vote. The message is that something is very wrong with the set-up. Then again, after so many years of attacks on local government by central Government, we should not be surprised by that apathy.

It was the systematic destruction of local democracy that made the Scottish Parliament so necessary. If the Conservatives had remained in power much longer, they would have initiated a demand for a North of England Parliament. I believe that because I was first elected as a ward councillor on the same day that Margaret Thatcher became Prime Minister. I must say that it was the one and only moment of celebration that we shared, but I was delighted to be elected in May 1979. To be a local councillor in the late 1970s was something to be proud of. I found myself surrounded by men and women of various political persuasions who had spent distinguished lifetimes giving real service to their localities. They had collectively built up local services, improved public health, and demolished slums and erected millions of decent houses in their place.

As institutions, the councils were far from perfect and could certainly have been improved. However, they were generally controlled by decent and committed people who were rightly proud of their achievements. Those councillors never guessed on that fateful day in 1979 that the next 18 years would be the worst in the history of British local democracy and that it would change for ever. Instead of developing and improving the communities in which they lived, those councillors were forced, year on year, to cut services, scrap capital programmes and shrink the wages and conditions of loyal council workers.

Elected councillors quickly became the villains in almost everyone's eyes, as central Government forced them to increase rates, impose the poll tax and simultaneously devastate the local services that they had previously nurtured, for no pay, in their leisure time and often on top of full-time jobs. As the pressure mounted, many of those who had served their communities so well grew tired and stood down, and local government was the loser.

It is to be hoped that that is behind us now, but immense damage has been done. I believe that it will take many years to rebuild the respect, dignity and satisfaction once associated with being a councillor. However, the job must be done because local democracy must be strengthened; it must be changed and made to count again. I welcome the Bill as a meaningful start. As local government acquires power, it must begin to assume more responsibility. That is the only way that we shall return to the days when local people believed that it was important to turn up and vote in council elections.

It appears that almost everyone welcomes the abolition of compulsory competitive tendering. The Confederation of British Industry says that the time is right to move away from CCT, and the Local Government Association particularly welcomes the abolition of CCT and the inclusion of best value proposals. It makes one wonder who was in favour of CCT in the first place. In all honesty, CCT gave local authorities the incentive to move out of the competitive dark ages, but it was clearly too blunt an instrument. The concept of best value is clearly better than compulsory competitive tendering and should be supported.

Best value must certainly not be a soft option. I welcome the fact that the CCT regime will not be removed until best value legislation is in place. The problem with CCT was that far too many local authorities concentrated on survival and finding ways of getting around the regulations, rather than on delivering better public services. I was reminded of the many bonus schemes that I experienced in industry when employees spent more time finding ways of getting around the schemes than producing goods. CCT was introduced in an atmosphere of confrontation that was the hallmark of Government in the early 1980s. Instead of being viewed as a partner of central Government, local government was treated as the enemy. I am not referring only to Labour-controlled councils; Tory councils were often treated with just as much contempt by the Government of the day.

The Bill moves us on and, it is to be hoped, will ensure that continual improvements in quality and efficiency are at the heart of best value. I worry about the detail of best value and would certainly have welcomed more insight into how the intervention process will work. We all await that with trepidation.

Best value will not work if it becomes as threatening and destructive as compulsory competitive tendering. My local authority in Bolton does not need—and never needed—to be told that it is good to be more efficient. It has enough nous and incentive to drive for efficiency improvements and it has certainly been forced to make enough cuts over the years to understand how significant efficiency savings are. It is much more important that we allow councils voluntarily to do better and that we jointly seek better local government, because if we fail, the public will increasingly respond by staying at home on election days. As the public stop voting locally, local democracy will be diminished and will reach the point at which it is no longer representative or democratic.

Bolton council understands that and has as much interest in ensuring public support and confidence as anyone. That is why, in advance of the Bill, Bolton has already set up a best value team. That is why it has taken initiatives to ensure constant improvement in local services through partnership with the public. I very much welcome the steps that the council has taken, especially its vision for future partnership with organisations from the whole community, including business, trade unions, the voluntary sector, the police and many others.

The clear powers in the Bill will enable Bolton council, and authorities across the country, to take on a more effective community leadership role. The Bill will reinforce and build on the progress that has already been made through such initiatives as the Bolton vision for the future, the 3Ds partnership and the Halliwell central forum.

On council tax capping, I welcome the removal of the existing capping powers and their replacement with more discriminating reserve powers. However, I believe, as I am sure many of us do, that our ultimate objective should be to abolish capping entirely. Power and responsibility go hand in hand and we should trust that the local community will remove the power of its local politicians if they become irresponsible. If the public choose not to do that, so be it. That is what I understand local democracy to be. If the public are willing to pay increasing levels of council tax, that is their choice. Levels of local taxation should be decided locally. If the decision on how much to pay were set free from interference by central Government, that might increase local election turnout more than anything else.

It is obvious that we need a Bill that will deliver what the White Paper suggested—local government in touch with the people. However, to achieve that goal, we must trust local government and the local community and allow them to run their own affairs.

9.14 pm

Mr. David Heath (Somerton and Frome)

I should declare an honorary interest as an honorary vice-president of the Local Government Association, which, although I am proud to be one, is not a great distinction because many hon. Members are vice-presidents of the LGA. I should also list my crimes—I was a member of Somerset county council for 12 years, leader of the council, chairman of the police authority and vice-chairman of two national bodies. For three years, I was on the Audit Commission. Quaintly, like many hon. Members who were in local government and now find themselves in Parliament, I still believe in local government and local democracy and I am prepared to stand up and say so because it is important.

Unfortunately, coming to this place seems to have addled my brain. When I intervened on the right hon. Member for Skipton and Ripon (Mr. Curry), I was incapable of remembering a list of three things, which is a shame. We argued for so many years with Conservative Governments for the need to remove capping—of course—the need to reform the uniform business rate, which it seems we spent yesterday reinforcing, and the removal of the wretched area cost adjustment, into which I shall not go because it is not relevant, but on which the Government are ducking the issue.

We should welcome some parts of the Bill. The removal of compulsory competitive tendering is the obvious case in point. The problem with CCT was always the first C. There was nothing wrong with competitive tendering as a process, a tool of local government. The compulsion was wrong. Distortions introduced by Conservative legislation meant the removal of fair competition and the stripping of local authorities of much work that had been properly done. Incidentally, CCT did not result in such good value to the taxpayer because of the value-added element that was lost in the process—let alone the detrimental effect on employees.

I welcome in broad terms the best value proposal, but I am worried as to whether the guidance will become uniform. My experience on the Audit Commission made it clear that it is very difficult to move from using performance indicators, however sophisticated they are, to a process that enables the establishment of best practice without dictating best practice. The most important thing is the capacity for communities to take local decisions that are right for them. I hope that local government will be properly involved in the derivation of performance indicators and in identifying areas that are best left to the local electorate to determine. There must be real choice in local government. If it means anything, it is the capacity to make a proposal and allow people a choice on the basis of that proposal.

I am worried about clause 14. I listened carefully to the Minister comment on how a general power of competence would not achieve similar results. I hope that we shall have a chance in Committee to explore the audit trail further, because I am not convinced that it does not exist. One area that is outside the audit trail of either the Audit Commission or the National Audit Office at the moment is that of quangos, such as housing associations. We have begged time and again for them to be included in the audit regime. None the less, I cannot see how bodies that are separately audited by authorities and set up by Parliament can fall outside the audit trail.

The major problem is capping. We have heard all this nonsense about reserve powers before. We heard it from the previous Government, yet, eventually, every single county council was capped. That was not the use of a reserve power; it was universal capping. The pre-notification issue, about which we have also heard before, is equally important. An indeterminate sword of Damocles hung over local authorities, which was detrimental to the way in which local authorities were managed and not in the best interests of rate payers.

All sorts of issues are involved in the way in which capping will be implemented in its new form, such as that concerning authorities that are already spending below the standard spending assessment. SSAs are arbitrary, not accurate, measures. It would be quite wrong to use them as a test of whether a council is competent and efficient.

The essential issue on which I shall dwell is that of democracy. If we do not give local voters real choices, why on earth should they vote? The Conservatives made that mistake over many years in government. By introducing universal capping and ensuring that there was no difference in total spend, they removed any local argument for electing Conservative councillors, and paid the penalty for it. It worries me that the new proposals will achieve exactly the same by other means—by virtue of best value, dictation from the centre and the reserve power of capping.

Dr. George Turner

Will the hon. Gentleman give way?

Mr. Heath

No, I do not have time.

It worries me that we shall not create the essential element of local democracy: the capacity to take local decisions for local people and communities. That is what local government and local democracy are about, and it should be what this Government are about.

9.19 pm

Mr. Nigel Evans (Ribble Valley)

We have had an interesting debate. We heard 18 Back-Bench speakers, many of them with long years of service in local government, so a great deal of experience was brought to the debate. Instead of attacks on capping and compulsory competitive tendering, it might have been appropriate if those on the Labour Benches had offered apologies for the antics of some of their local authorities over many years. I am referring not just to the imposition of high council taxes, but to mismanagement and, in too many cases, corruption as well.

Dr. Lynne Jones

Will the hon. Gentleman give way?

Mr. Evans

I want to make a little progress as I do not have much time, but I shall give way to the hon. Lady later.

We are used to local authorities twinning, but a number of Labour-controlled authorities have overdone it. Poor service was twinned with high council taxes. To those authorities, beacon councils meant not beacons, but bonfires on which their council tax money seemed to go up in smoke, without any impact on services.

The hon. Member for Denton and Reddish (Mr. Bennett) seemed to associate large sums of money with much better services. Time and again, the figures proved that that was not the case. Some of the authorities with the highest council taxes and the highest level of expenditure had the poorest levels of service. We must divorce the two and find out how the money can be effectively and efficiently spent.

I went through this morning's newspapers expecting to read the usual spin doctors' reports on the Bill, telling us how wonderful it was and how it would restore local democracy, free local government and keep faith with the councils. Instead of that, the newspapers were dominated by national politics and the Prime Minister's attempts to fight back after the Government's black Christmas. The Guardian reported that the Government's fight-back got off to a shaky start…as ministers braced themselves for hard times ahead". It referred to three grim weeks which have cost two ministers' and one spin doctor's jobs". Perhaps that was the spin doctor who would normally have spun this sort of story.

Someone less generous than I might have accused the Government of engineering the back-stabbing and in-fighting as a distraction from their policies, especially on local government. As the Government relaunch themselves, they tell us that they want to move away from personality to policy. If the Bill is an example of policy, no wonder the papers are full of personality. My hon. Friend the Member for Mole Valley (Sir P. Beresford) said that many hon. Members had read the Bill and read between the lines. They know exactly what the Bill means.

The hon. Member for North-West Norfolk (Dr. Turner) said that he hoped that local government would be judged on its own merits and not used as a poll on national Government. After 18 months of Labour Government, I understand why he should say that. The Bill represents the continuation of an approach that lacks direction, consistency and detailed thought.

As we enter a new century, we witness attacks on our constitution and an erratic reform of government at all levels. [Interruption.] The Bill is part of that pattern and comes from the Government who have given us one institution for Scotland with a certain set of powers, including tax-raising powers; another institution for Wales, where the Welsh Assembly will take on many of the powers mentioned in the Bill; a different set of powers for London, with a directly elected mayor; and voting systems that beggar belief, especially the closed-list system for European elections.

We are constantly told to look at the big picture, but there is no big picture of which these reforms form part—only a series of small pictures which bear no relation to one another. [Interruption.] It is not a grand mosaic, but a system of crazy paving. None of these reforms—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I am sorry to interrupt the hon. Gentleman, but we cannot have a continuous sedentary chorus from those on the Government Front Bench.

Mr. Evans

Thank you, Mr. Deputy Speaker. None of these reforms will help. My hon. Friend the Member for North Essex (Mr. Jenkin) called them half-baked, but that gives them credit that they ill deserve.

Dr. Lynne Jones

Will the hon. Gentleman give way?

Mr. Evans

The reforms to CCT and capping continue the hotch-potch and mish-mash that will leave local government in the dark and uncertain of its relationship with central Government.

Dr. Jones

I was initially motivated to intervene when the hon. Gentleman talked about the antics of local government. Then he talked about half-baked ideas. That reminded me of the Conservative Government's performance in power. The hon. Gentleman talks about antics, but what about the Tories, who rushed ahead with rail privatisation, costing the taxpayer £1.5 billion? Surely that is a much worse antic than any that local government has ever got up to. Many of local government's antics have been the result of pressures put on it by the Tory Government, which resulted in a waste of money in bureaucracy, the hiring of consultants—the beauty contest. Too many antics were initiated by the Tory Government.

Mr. Evans

That is a deviation. I enjoyed the hon. Lady's earlier intervention because she has enormous reservations about the Bill. I thought that new Labour could see the merits of privatisation and competition; that it agrees with privatisation, including of the railways. I see no provision for the renationalisation of the railways. I suspect that the Government have seen the merits of that.

The Bill simply continues the mish-mash of the existing relationship. In new Labour's brave new world, local government will have to adhere to some of the new rules of the game, except that it will not be told what the rules are, and they will change from local authority to local authority. The Bill tells us that dogma is out, but dog's dinner is in, and all sorts of scraps are thrown around.

CCT and capping gave certainty and predictability in local government. It gave value for money and new disciplines to a system that was running away with itself. It introduced competition. We heard from the hon. Member for Bolton, North-East (Mr. Crausby), that CCT had some merits. We heard that, albeit begrudgingly, from a number of Labour Members. They conceded its benefits to local government. It has enabled local authorities to escape from the accumulation of trade union diktat and Spanish practices which benefited the provider of services at the expense of the recipient and the council tax payer. We must always remember that.

We have talked a little today about the electorate and how to get more people out to vote. But we must always remember the level of service that council tax payers receive. It is important to them that we get it right. CCT was introduced in the teeth of Labour opposition in the 1980s and throughout 1988, when it was extended—Labour now sees the benefits of that, including savings of about 7 per cent.

There are too many reserve powers and unanswered questions in the Bill. It dilutes competition and gives enormous discretion to the Secretary of State. Hon. Members from both sides of the House have already criticised the Henry VIII clauses.

Mr. Deputy Speaker

Order. I am sorry to interrupt the hon. Gentleman once again, but there should not be a mini-discussion among Opposition Members either. If hon. Members do not want to listen to the debate, I suggest that they leave the Chamber.

Mr. Evans

Clause.3(5) states: The Secretary of State—

1. (a) may issue guidance to best value authorities generally or to one or more particular authorities;
2. (b) may issue different guidance to different authorities".

Clause 4(2) states: An order may specify different performance indicators or standards—

1. (a) for different functions;
2. (b) for different authorities;
3. (c) to apply at different times."

The Bill is extremely vague in parts and we have grave concerns. My hon. Friend the Member for North Essex talked about the Secretary of State's and the Welsh Assembly's 27 new powers. We have enormous reservations about the fact that those new powers will be held in reserve and could be used.

We have no qualms about the proper devolution of powers. I am talking not about local authorities but about individuals and institutions, such as schools, hospitals and general practitioners. But the reserve powers given to the Secretary of State by the Bill are not the enabling powers that we would wish to see and which we were promised at the general election for the reform of local government. I am not surprised that the Minister is already talking about amendments that she hopes will be made in Committee, because the Bill has not been properly thought through.

It is strange that local authorities are supposed to take instruction from Ministers who think that best value is flying around the country and the rest of Europe in private jets instead of taking scheduled airlines. Ministers can certainly see best value in houses in Islington; they may not have the money, but they know how to get it. How can local authorities take instruction from Ministers who do not show best value in government?

We need to hear a lot more about clause 17, which was mentioned by the hon. Member for Bethnal Green and Bow (Ms King)—about the pitfalls, the ticking time bomb and the abuses for which it could be used. At least competition policy meant that all local authorities had to follow strict guidelines so that abuses could not be committed, as in the past.

Part of the problem with local authority contracts was the over-politicisation of the way in which they were awarded. Clause 17 may be abused—perhaps not by the current Secretary of State or by the Welsh Assembly in its first 12 months—and that problem must be addressed. I cannot for the life of me see why we cannot address it in the Bill if we know, as the hon. Member for Bethnal Green and Bow said, that many aspects are causing grave concern.

In respect of capping, the great question is, "When is capping not capping?" The answer is, "When it is new capping." The Secretary of State's reserve powers for new capping are enormous. The Bill puts local authorities in the dark, because it allows him, or the Welsh Assembly, to use capping powers after the event—if local authorities introduce excessive charges.

What are excessive charges? Is three times the rate of inflation an excessive council tax rise? If so, a number of local authorities will face the cap from the Government this year, because many charges will go up by 7 per cent. Indeed, there will be double-digit increases, so what does "excessive" mean?

Let us at least give a clue to local authorities, which have to set such charges. The Bill is far too vague: the Secretary of State is free to cap, or not to cap. Although the criteria that he chooses must obviously be the same for all local authorities, no one knows what they are. It will also be up to him to decide what "excessive" means.

There is fear in Wales that the new Welsh Assembly will usurp the powers of some local authorities. It has the power to distribute moneys passed on by central Government—using the Barnett formula, we are assured—but will its First Secretary or a Committee decide what "excessive" happens to be? A coalition could run the Welsh Assembly—not the Labour party, as it believes—so how would that work?

A number of concerns have been raised, not only by Conservative Members. [Interruption.] It is all very well for the Minister to smirk, but concerns have been expressed by her own Back Benchers. The hon. Member for Bolton, North-East mentioned the advantages brought by CCT and the fact it can be harmful if power drifts away from those who are governed. I agree, not simply in respect of Westminster, but of Brussels.

My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) mentioned the discontinuity between the White Paper and the general election and the Bill. A number of people, including many in the local government sector, will be disappointed. The Local Government Association briefing mentions aspects of the detail which the Association will wish to scrutinise during the Bill's passage, in particular, the wide-ranging reserve powers proposed for the Secretary of State in applying Best Value and the new regime to regulate council tax; the provisions for inspection under Best Value, including existing inspectorates' roles; the provisions for contracting out in clause 16; and the criteria which will trigger the new capping powers in the Bill. The association has reservations about virtually the entire Bill.

Dr. George Turner

The hon. Gentleman might at least have added that the LGA "broadly welcomes" the Bill. Should he not have quoted those words before proceeding to the association's qualifying remarks?

Mr. Evans

The fact is that, at the conclusion of its briefing, the association expresses a number of reservations about the Bill—the same reservations that we have heard throughout today's debate. While it may welcome some of the broad thrust of the legislation, it has enormous reservations. We would be wrong to ignore reservations expressed by representatives of local authorities throughout the country who came to the House today to make their concerns known, and to dismiss their views on the ground that they welcome some of the changes.

A number of other points were made. My hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) spoke of the drift of power away from local government, and said how damaging that would be. We want to enable local government to become responsible to the electorate. Other hon. Members asked how we could make the electorate more interested in going out and voting in local elections. Certainly, we must do more to deal with that problem. My hon. Friend the Member for Mole Valley, who has a long and distinguished history of service in local government, mentioned apathy. He too expressed reservations about clause 17, and spoke of the absurdity of capping below SSA. I hope that the Minister will deal with that when he winds up the debate.

My hon. Friend the Member for Wantage (Mr. Jackson) spoke of getting back to fundamentals in government. We need many more changes. I understand that the Government are to produce more reforms, but there is great disappointment about the fact that they have begun with this measure when so many others could have been presented.

My right hon. Friend the Member for Skipton and Ripon (Mr. Curry) mentioned the consultation process. We need to know a little more about that. When I was a county councillor in West Glamorgan, the council used to engage regularly in consultation with local businesses. Local business representatives would troop in, and would be listened to by councillors. The authority was, of course, Labour controlled. Out they would go; then the council would jack up the rates by 30 per cent. or 35 per cent., showing no concern whatever for the local businesses and no interest in where they would find the extra money. We need more detailed information about the procedure involved in the consultation. Guidelines are to be issued, but we do not know what they will be. As with so much in the Bill, we simply do not know.

The hon. Member for Denton and Reddish spoke of a smokescreen for further Government control, referring to fears about the Bill that we all share. He spoke of Whitehall's tendency to dictate what local government should do. The Bill will not release local government; it will not give local government far more control.

The hon. Member for Castle Point (Mrs. Butler) said that the consultation would increase confidence in local government, but I hope that what I have said about the procedure shows that, in many instances, consultation is a sham. If it is to be effective, it must take place in a meaningful way. Local authorities must listen to what local people say. Local people—not just representatives of organisations, but individuals—have an important voice, and local government must listen to them.

The Bill does not represent a third way; it is third rate. It does not set local authorities free; it puts fresh chains on them. In our view, this is "new Labour, new chains". The Bill does not give authorities predictability; it blindfolds them with the threat that, if they step out of line, they will be hit. It gives the Secretary of State, or the Welsh Assembly, enormous reserve powers. It is arbitrary in nature, unclear in presentation and unpredictable in practice. Rather than waving a wand to improve the functioning of local government, the Secretary of State will be waving a stick.

We were promised a great deal by the Government, but, as usual, their approach is piecemeal and ill defined. As the best effects of compulsory competitive tendering are ditched and the protection of capping abolished—or not, depending on the mood of the Secretary of State or the Welsh Assembly—only one thing is certain in the Bill: that council taxes will rise. There is no guarantee whatever that the services that people receive will improve.

The Government are torn between dogma and doubt. The one leads to the ditching of sensible proposals that protect the council tax payer, while the other leads to listing. Together, they have created a party at war with itself, a Cabinet besotted with position, not political direction, and a Government with their eye on each other, not on the ball. There is a price to be paid for incompetent government and, with the passage of the Bill, it will land on everyone's doormat. That is why we cannot and will not support the Bill tonight.

9.40 pm

The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones)

There is a price to be paid for incompetent government and the number of Conservative Members sitting opposite is witness and testament to that.

I agree with the hon. Member for Ribble Valley (Mr. Evans) that the debate has been interesting. It has convinced me of three things: first, that there is widespread support for bringing the services that are provided by local authorities in England and Wales up to the standards of the best in terms of both cost and quality; secondly, that if we are to deliver best value in full and improve local financial accountability, central Government need new powers and local government needs real flexibility; and thirdly, that those new powers need to be exercised with care, with broad agreement and for the benefit of local communities. I take heed of those hon. Members who have advocated caution.

The hon. Member for North Essex (Mr. Jenkin) initially argued that there was widespread support for the continuation of compulsory competitive tendering, rather than best value. To substantiate that claim, he had to resort to quoting the much quoted Institute of Directors—not all the Institute of Directors; only 49 per cent. of it apparently. When he was told that the larger, more representative CBI supported the Government's position, one Conservative Member, who is no longer with us, remarked from a sedentary position that the CBI was merely a bunch of socialists. What could better demonstrate the pathetic and marginal nature of the current Tory party than the fact that it believes that the CBI is a bunch of socialists?

Later, Tory Members chose to have a philosophical debate with one another and very interesting it was too. The hon. Member for Wantage (Mr. Jackson) made an interesting contribution that attracted considerable agreement from the Labour Benches because he attacked fundamentally the philosophy of the previous Government. However, he rather spoiled it by claiming, apparently, that Thatcherism was a disguised socialist plot to reintroduce central planning to Britain. However, I am grateful for the many helpful proposals that have been made in the debate.

It is a time of great change for Wales. The advent of the National Assembly heralds a new era of inclusive politics in which the people of Wales and their representatives will have to work together for the common good.

The Assembly will be no talking shop. It will have at its disposal the £7 billion or so budget that is currently assigned to the Welsh Office. The Assembly will allocate those resources and set policies and standards for services. In doing so, it will wish to work in close partnership with local government to deliver services that will meet the needs of the people of Wales.

It is my special privilege to turn to the provisions that deal with the National Assembly for Wales. Before the referendum, we promised that new Government Bills would reflect the position of the Assembly within the modernised British constitution and would confer on it powers consistent with those that it will inherit from my right hon. Friend the Secretary of State later this year. The Bill is the first to do so.

Under the Bill, the Assembly will be able to decide how to exercise its powers to take forward the modernisation of Welsh local government in a way that reflects the special needs of Wales and the democratically expressed wishes of its people. That is the only way to go if the Assembly is to have the trust and respect it deserves. In that sense, the Bill paves the way for the shape of future primary legislation for Wales. Parliament should provide the framework within which the Assembly will operate, without seeking to be unduly prescriptive. I am delighted that the Bill does that and I commend it to the House as a new and refreshing means of delivering real power into the hands of a body that will exercise it in an open and accountable fashion.

My hon. Friend the Member for Clwyd, West (Mr. Thomas) asked about the role of the partnership council and its best value. It is one of the many areas in which the Assembly can discuss with local government how it is exercising its powers with respect to local authorities. He also asked about the position of police authorities in Wales. The Bill provides that the best value powers in respect of those authorities will be exercised by my right hon. Friend the Home Secretary.

Mr. Evans

Could clause 17 be used by the Welsh Assembly so as to use the Welsh language as a means by which contracts are handed out by local authorities?

Mr. Jones

The hon. Gentleman hails from Wales and he will know that that question is meant to be entirely mischievous. There is no possibility of a democratically elected body for Wales, where 80 per cent. of the population does not speak Welsh, doing such a thing. The hon. Gentleman should be ashamed of himself for trying to make mischief out of the real consensus that exists in Wales about the promotion of the Welsh language.

There has been concern from some hon. Members about the intervention powers in the Bill. The hon. Member for North Essex trumpeted the 27 new powers for the Secretary of State that he claims are contained in the Bill. He chose to ignore the fact that 50 powers introduced by the previous Administration will be repealed by the Bill. By my calculation, that means that the Bill represents a net reduction of 23 in centralising powers. The Bill removes powers from central Government. By contrast, the hon. Gentleman declares himself proud of the 28 pieces of local government legislation introduced by the Conservative party between 1980 and 1997.

Intervention in an authority's affairs by the Secretary of State or the Assembly will be appropriate to the nature of any failure. It will be the exception, not the rule. It will be the last resort.

Dr. Evan Harris (Oxford, West and Abingdon)

On that subject, may I draw the Minister's attention to a provision that is not repealed by the legislation—the disgraceful section 28 of the Local Government Act 1988, which purports to ban the promotion of homosexuality by local authorities, rather like purporting to ban the promotion of left-handedness? That has resulted in a failure to provide good sex education, the failure of pastoral care for young lesbian and gay pupils and other difficulties that schools in particular have had to face. Why did not the Government take the first opportunity to repeal that stain on our statute book?

Mr. Jones

The Government have a commitment to repeal that legislation before the end of this Parliament, but it is not a part of best value.

Some hon. Members have expressed concern about the apparently excessive powers that the Bill gives the Secretary of State and the Assembly to make orders and issue statutory guidance. The alternative would be to put more detail in the Bill. We do not believe that that would be the right way forward. Best value needs flexibility. That can best be provided through secondary legislation and guidance. That is how we can take into account the experience of the pilots. It is how we can introduce changes at operational level as circumstances change.

The Opposition have failed to appreciate the fact that we have been discussing these powers with local government and others for over 18 months. Let me make it clear that the powers will be used with considerable care. They will be used after consultation and we will seek consensus in the way we use them. We are developing a protocol with the Local Government Association setting out the general principles that will underpin the exercise of the intervention powers and the broad procedures to be followed.

Mr. Jenkin

Will the Minister undertake to make the protocol available before the Committee stage starts? It is impossible to discuss how the powers will be exercised when the Government are playing their cards so close to their chest.

Mr. Jones

The protocol will be made available as soon as it is agreed with the Local Government Association.

Some hon. Members have objected to clause 14. The powers are included in the Bill to help local authorities to deliver best value. We shall consult widely before using the powers. We shall look carefully at best value authorities' powers to trade and engage in partnerships.

We are also considering the ability to pool budgets with other public bodies to achieve common objectives. Such powers will have to be curtailed. We cannot create new monopolies. We shall not allow special advantages for authorities to trade in the market. The Secretary of State will be able to impose restrictions and conditions on the use of the powers. We shall ensure that risks are limited and public funds protected. The powers will remove the constraints that prevent authorities from delivering best value. That must be good for local people.

My hon. Friend the Member for Wolverhampton, South-West (Ms Jones) expressed concern about authorities drowning in Government performance indicators. Some aspects of local services are of national interest, such as levels of educational attainment or child protection. It is right for the Government to set standards to ensure a minimum level of such services. However, authorities will set a range of indicators to reflect their priorities. Those indicators will play a key role in the performance management framework. The Audit Commission has consulted on indicators and will continue to do so in the coming year.

The Bill is not about nationalising local government, as some Opposition Members have suggested. It provides local authorities with a framework to deliver effective and efficient local services for local people. Councils will be held to account for their delivery of services. The duties to publish annual performance plans and to consult service users and others will be key mechanisms in making that happen. The Bill is not about nationalisation; it is about enabling local government to do its job better.

The Conservatives were also concerned that the Bill says nothing about how competition will work under best value. They do not believe that best value will provide real competition. We recognise that competition will be an important part of best value. In each review, authorities will need to test the competitiveness of each service. In our White Papers we have identified a number of ways in which that can be done. There will be competition, but unlike under compulsory competitive tendering, it will be fair, based on the principle of partnership and in a climate of respect for employees' rights. If local authorities seek to evade or fudge competitiveness, it will be apparent in the quality or cost of their services and will be picked up by the audit. There is nowhere to hide.

I greatly appreciated the arguments against CCT made by my hon. Friend the Member for Southampton, Test (Dr. Whitehead). I am indebted to him for revealing to me the case of the Barnet duck. I assure him that under best value Barnet ducks will grow fat.

Equity has been referred to during the debate. It is inherent in best value. An effective authority will ensure that it is built into the review process and underpins the local performance plan. Many local authorities are addressing that already. There is no need for a specific mention in the Bill.

The hon. Member for Sutton and Cheam (Mr. Burstow) asked how we would use the experience of the pilot areas to draw up secondary legislation and guidance. The pilot studies are being widely assessed. My right hon. Friend the Secretary of State and I receive regular reports. We both have a pilots steering group and working groups which bring together the Confederation of British Industry, the Trades Union Council, the Audit Commission, the Local Government Association and the voluntary sector. We have not set up all those pilots and engaged all that expertise only to ignore them. It is to take account of the experience of the pilots that we have left some flexibility in the Bill as to how we implement the details of the framework.

We were elected on a manifesto that promised that we would retain a reserve power to control excessive council tax increases. It is right for central Government to take a responsible interest in the responsible use of local authority powers. In England, only 25 per cent. of local government finance is raised locally and in Wales the figure is even lower. We have to be accountable to the national taxpayer, but we also need to protect local taxpayers, and we will.

Mr. Burstow

Will the Minister give way?

Mr. Jones

No. I am trying to refer to as many points as possible.

We shall do so, however, in a more flexible and discriminating fashion. Those who are criticising the reserve powers are looking at them in isolation and not as part of a wider package of local government reform to which the Government are committed. That package of reform is providing local accountability and responsibility. Indeed, we hope that the other changes that have been proposed as part of the review of local government finance will mean that the reserve power is used rarely if at all.

In conclusion, modern local government is a vital part of the fabric of the dynamic, democratic, fair and inclusive society that people want and it is vital to securing the quality of life that people deserve and have a right to expect. We recognise that modernising local government will take time and will be demanding on all concerned. Some of our reforms will require wide consultation before they can be introduced, in recognition of the radical and important nature of those changes for local government and the local people it serves.

The hon. Member for Mole Valley (Sir P. Beresford) was cynical about the value of consultation. We should expect no more from a former Conservative local government Minister. The hon. Member for North Essex welcomed the idea of beacon councils, and my hon. Friend the Member for Denton and Reddish (Mr. Bennett) called for local business rates. Our White Paper contains proposals for improvements in those areas and many more, on which we are currently in discussion with the Local Government Association, local government and other parties before conducting wider public consultation on the way forward.

The current Local Government Bill is the first step. Among all our public institutions, councils have a special status as local, directly elected bodies. They are able to make things happen on the ground—where it really matters. Together, the changes will renew the framework for local government, opening up the way for councils to meet the challenges and needs of the 21st century.

The Government do not believe that it is right that local people should have to put up with poor services and high local taxes. They need a voice that will be heard. Authorities need to respond to that voice, and to take pride in the way in which they respond.

Too often under the previous Administration the drive to cut costs in service delivery overrode all other considerations. Dogma prevailed and users of local authority services took a back seat. I have to acknowledge that local authority performance in the delivery of services is still patchy—with some achieving high standards and others not.

Best value represents a fresh start for all councils and a way forward into the new millennium. There is a hunger in local government to meet the challenges of the new millennium. The Bill will enable that, and I commend it to the House.

Question put, That the amendment be made:—

The House divided: Ayes 35, Noes 341.

Division No. 30]	[9.59 pm
AYES
Allan, Richard	Kennedy, Charles (Ross Skye)
Ashdown, Rt Hon Paddy	Kirkwood, Archy
Baker, Norman	Maclennan, Rt Hon Robert
Beth, Rt Hon A J	Michie, Mrs Ray (Argyll & Bute)
Bell, Martin (Tatton)	Oaten, Mark
Brake, Tom	Öpik, Lembit
Brand, Dr Peter	Rendel, David
Bruce, Malcolm (Gordon)	Russell, Bob (Colchester)
Burnett, John	Smith, Sir Robert (W Ab'd'ns)
Burstow, Paul	Stunell, Andrew
Cable, Dr Vincent	Taylor, Matthew (Truro)
Chidgey, David	Tonge, Dr Jenny
Davey, Edward (Kingston)	Tyler, Paul
George, Andrew (St Ives)	Webb, Steve
Harris, Dr Evan	Willis, Phil
Harvey, Nick
Heath, David (Somerton & Frome)	Tellers for the Ayes:
Hughes, Simon (Southwark N)	Mr. Adrian Sanders and
Jones, Nigel (Cheltenham)	Mr. Donald Gorrie.
Keetch, Paul

NOES
Ainger, Nick	Cryer, John (Hornchurch)
Ainsworth, Robert (Cov'try NE)	Cummings, John
Alexander, Douglas	Cunliffe, Lawrence
Allen, Graham	Cunningham, Jim (Cov'try S)
Anderson, Donald (Swansea E)	Curtis—Thomas, Mrs Claire
Anderson, Janet (Rossendale)	Dafis, Cynog
Armstrong, Ms Hilary	Dalyell, Tam
Ashton, Joe	Darling, Rt Hon Alistair
Atherton, Ms Candy	Darvill, Keith
Austin, John	Davey, Valerie (Bristol W)
Banks, Tony	Davidson, Ian
Barron, Kevin	Davies, Geraint (Croydon C)
Battle, John	Davies, Rt Hon Ron (Caerphilly)
Bayley, Hugh	Dean, Mrs Janet
Beard, Nigel	Dewar, Rt Hon Donald
Beckett, Rt Hon Mrs Margaret	Dismore, Andrew
Bell, Stuart (Middlesbrough)	Dobbin, Jim
Benn, Rt Hon Tony	Dobson, Rt Hon Frank
Bennett, Andrew F	Donohoe, Brian H
Benton, Joe	Doran, Frank
Bermingham, Gerald	Dowd, Jim
Berry, Roger	Drew, David
Best, Harold	Drown, Ms Julia
Betts, Clive	Dunwoody, Mrs Gwyneth
Blackman, Liz	Eagle, Angela (Wallasey)
Blears, Ms Hazel	Eagle, Maria (L'pool Garston)
Blizzard, Bob	Edwards, Huw
Blunkett, Rt Hon David	Efford, Clive
Borrow, David	Ennis, Jeff
Bradley, Keith (Withington)	Etherington, Bill
Bradley, Peter (The Wrekin)	Fatchett, Derek
Bradshaw, Ben	Field, Rt Hon Frank
Brinton, Mrs Helen	Fisher, Mark
Brown, Rt Hon Nick (Newcastle E)	Fitzpatrick, Jim
Brown, Russell (Dumfries)	Flint, Caroline
Browne, Desmond	Flynn, Paul
Buck, Ms Karen	Follett, Barbara
Burden, Richard	Foster, Rt Hon Derek
Burgon, Colin	Foster, Michael Jabez (Hastings)
Butler, Mrs Christine	Fyfe, Maria
Byers, Rt Hon Stephen	Galbraith, Sam
Campbell, Alan (Tynemouth)	Galloway, George
Campbell, Mrs Anne (C'bridge)	Gardiner, Barry
Campbell, Ronnie (Blyth V)	Gerrard, Neil
Campbell-Savours, Dale	Gibson, Dr Ian
Canavan, Dennis	Gilroy, Mrs Linda
Cann, Jamie	Godman, Dr Norman A
Caplin, Ivor	Godsiff, Roger
Caton, Martin	Goggins, Paul
Chaytor, David	Griffiths, Jane (Reading E)
Chisholm, Malcolm	Griffiths, Nigel (Edinburgh S)
Clapham, Michael	Griffiths, Win (Bridgend)
Clark, Rt Hon Dr David (S Shields)	Grocott, Bruce
Clark, Dr Lynda (Edinburgh Pentlands)	Gunnell, John
	Hain, Peter
Clark, Paul (Gillingham)	Hall, Mike (Weaver Vale)
Clarke, Charles (Norwich S)	Hall, Patrick (Bedford)
Clarke, Eric (Midlothian)	Hamilton, Fabian (Leeds NE)
Clarke, Rt Hon Tom (Coatbridge)	Hanson, David
Clarke, Tony (Northampton S)	Harman, Rt Hon Ms Harriet
Clelland, David	Heal, Mrs Sylvia
Clwyd, Ann	Healey, John
Coaker, Vernon	Henderson, Doug (Newcastle N)
Coffey, Ms Ann	Henderson, Ivan (Harwich)
Cohen, Harry	Hepburn, Stephen
Coleman, Iain	Heppell, John
Colman, Tony	Hesford, Stephen
Connarty, Michael	Hinchliffe, David
Cooper, Yvette	Hodge, Ms Margaret
Corbett, Robin	Hoey, Kate
Corbyn, Jeremy	Home Robertson, John
Corston, Ms Jean	Hood, Jimmy
Cousins, Jim	Hoon, Geoffrey
Crausby, David	Hope, Phil
Cryer, Mrs Ann (Keighley)	Hopkins, Kelvin

Howarth, George (Knowsley N)	Mitchell, Austin
Howells, Dr Kim	Moffatt, Laura
Hoyle, Lindsay	Moonie, Dr Lewis
Hughes, Ms Beverley (Stretford)	Moran, Ms Margaret
Hughes, Kevin (Doncaster N)	Morgan, Ms Julie (Cardiff N)
Humble, Mrs Joan	Morgan, Rhodri (Cardiff W)
Hurst, Alan	Morley, Elliot
Hutton, John	Morris, Ms Estelle (B'ham Yardley)
Iddon, Dr Brian	Mountford, Kali
Illsley, Eric	Mudie, George
Jackson, Ms Glenda (Hampstead)	Mullin, Chris
Jenkins, Brian	Murphy, Denis (Wansbeck)
Johnson, Alan (Hull W & Hessle)	Murphy, Jim (Eastwood)
Johnson, Miss Melanie (Welwyn Hatfield)	Naysmith, Dr Doug
	Norris, Dan
Jones, Barry (Alyn & Deeside)	O'Brien, Bill (Normanton)
Jones, Helen (Warrington N)	O'Hara, Eddie
Jones, Ms Jenny (Wolverh'ton SW)	O'Neill, Martin
	Organ, Mrs Diana
Jones, Jon Owen (Cardiff C)	Palmer, Dr Nick
Jones, Dr Lynne (Selly Oak)	Pearson, Ian
Jones, Martyn (Clwyd S)	Pendry, Tom
Keeble, Ms Sally	Perham, Ms Linda
Keen, Ann (Brentford & Isleworth)	Pickthall, Colin
Kelly, Ms Ruth	Pike, Peter L
Kemp, Fraser	Plaskitt, James
Kennedy, Jane (Wavertree)	Pollard, Kerry
Khabra, Piara S	Pond, Chris
Kidney, David	Pope, Greg
Kilfoyle, Peter	Powell, Sir Raymond
King, Andy (Rugby & Kenilworth)	Prentice, Ms Bridget (Lewisham E)
King, Ms Oona (Bethnal Green)	Prentice, Gordon (Pendle)
Kingham, Ms Tess	Primarolo, Dawn
Kumar, Dr Ashok	Prosser, Gwyn
Ladyman, Dr Stephen	Purchase, Ken
Lawrence, Ms Jackie	Quin, Ms Joyce
Laxton, Bob	Quinn, Lawrie
Lepper, David	Radice, Giles
Leslie, Christopher	Rammell, Bill
Lewis, Ivan (Bury S)	Rapson, Syd
Lewis, Terry (Worsley)	Raynsford, Nick
Linton, Martin	Reed, Andrew (Loughborough)
Livingstone, Ken	Reid, Rt Hon Dr John (Hamilton N)
Lock, David	Robinson, Geoffrey (Cov'try NW)
Love, Andrew	Rogers, Allan
McAllion, John	Rooker, Jeff
McAvoy, Thomas	Rooney, Terry
McCabe, Steve	Ross, Ernie (Dundee W)
McCafferty, Ms Chris	Rowlands, Ted
McCartney, Ian (Makerfield)	Roy, Frank
McDonagh, Siobhain	Ruane, Chris
Macdonald, Calum	Ruddock, Ms Joan
McDonnell, John	Russell, Ms Christine (Chester)
McGuire, Mrs Anne	Ryan, Ms Joan
McIsaac, Shona	Sarwar, Mohammad
McKenna, Mrs Rosemary	Savidge, Malcolm
Mackinlay, Andrew	Sawford, Phil
McNulty, Tony	Sedgemore, Brian
MacShane, Denis	Shaw, Jonathan
Mactaggart, Fiona	Sheerman, Barry
McWilliam, John	Sheldon, Rt Hon Robert
Mallaber, Judy	Shipley, Ms Debra
Mandelson, Rt Hon Peter	Singh, Marsha
Marek, Dr John	Skinner, Dennis
Marsden, Gordon (Blackpool S)	Smith, Angela (Basildon)
Marsden, Paul (Shrewsbury)	Smith, Rt Hon Chris (Islington S)
Marshall, Jim (Leicester S)	Smith, Miss Geraldine (Morecambe & Lunesdale)
Marshall-Andrews, Robert
Martlew, Eric	Smith, Jacqui (Redditch)
Meacher, Rt Hon Michael	Smith, John (Glamorgan)
Meale, Alan	Smith, Llew (Blaenau Gwent)
Merron, Gillian	Snape, Peter
Michael, Alun	Soley, Clive
Michie, Bill (Shef'ld Heeley)	Squire, Ms Rachel
Milburn, Alan	Steinberg, Gerry
Miller, Andrew	Stevenson, George

Stewart, Ian (Eccles)	Twigg, Stephen (Enfield)
Stinchcombe, Paul	Vaz, Keith
Stoate, Dr Howard	Vis, Dr Rudi
Strang, Rt Hon Dr Gavin	Walley, Ms Joan
Straw, Rt Hon Jack	Wareing, Robert N
Stringer, Graham	Watts, David
Stuart, Ms Gisela	White, Brian
Sutcliffe, Gerry	Whitehead, Dr Alan
Taylor, Rt Hon Mrs Ann (Dewsbury)	Wicks, Malcolm
	Wigley, Rt Hon Dafydd
Taylor, Ms Dari (Stockton S)	Williams, Rt Hon Alan (Swansea W)
Taylor, David (NW Leics)
Temple—Morris, Peter	Wills, Michael
Thomas, Gareth (Clwyd W)	Winnick, David
Thomas, Gareth R (Harrow W)	Winterton, Ms Rosie (Doncaster C)
Timms, Stephen	Wise, Audrey
Tipping, Paddy	Wood, Mike
Todd, Mark	Woolas, Phil
Touhig, Don	Worthington, Tony
Trickett, Jon	Wray, James
Turner, Dennis (Wolverh'ton SE)	Wright, Dr Tony (Cannock)
Turner, Dr Desmond (Kemptown)
Turner, Dr George (NW Norfolk)	Tellers for the Noes:
Twigg, Derek (Halton)	Mr. Keith Hill and
	Mr. David Jamieson.

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading):—

The House divided: Ayes 334, Noes 170.

Division No. 31]	[10.13 pm
AYES
Ainger, Nick	Campbell, Ronnie (Blyth V)
Ainsworth, Robert (Cov'try NE)	Campbell—Savours, Dale
Alexander, Douglas	Canavan, Dennis
Allen, Graham	Cann, Jamie
Anderson, Donald (Swansea E)	Caplin, Ivor
Armstrong, Ms Hilary	Caton, Martin
Atherton, Ms Candy	Chaytor, David
Austin, John	Chisholm, Malcolm
Banks, Tony	Clapham, Michael
Barron, Kevin	Clark, Rt Hon Dr David (S Shields)
Battle, John	Clark, Dr Lynda (Edinburgh Pentlands)
Bayley, Hugh
Beard, Nigel	Clark, Paul (Gillingham)
Beckett, Rt Hon Mrs Margaret	Clarke, Charles (Norwich S)
Bell, Stuart (Middlesbrough)	Clarke, Eric (Midlothian)
Benn, Rt Hon Tony	Clarke, Rt Hon Tom (Coatbridge)
Bennett, Andrew F	Clarke, Tony (Northampton S)
Benton, Joe	Clelland, David
Bermingham, Gerald	Clwyd, Ann
Berry, Roger	Coaker, Vernon
Best, Harold	Coffey, Ms Ann
Betts, Clive	Cohen, Harry
Blackman, Liz	Coleman, Iain
Blears, Ms Hazel	Colman, Tony
Blizzard, Bob	Connarty, Michael
Blunkett, Rt Hon David	Cooper, Yvette
Borrow, David	Corbett, Robin
Bradley, Keith (Withington)	Corbyn, Jeremy
Bradley, Peter (The Wrekin)	Corston, Ms Jean
Bradshaw, Ben	Cousins, Jim
Brinton, Mrs Helen	Crausby, David
Brown, Rt Hon Nick (Newcastle E)	Cryer, Mrs Ann (Keighley)
Brown, Russell (Dumfries)	Cryer, John (Hornchurch)
Browne, Desmond	Cummings, John
Buck, Ms Karen	Cunliffe, Lawrence
Burden, Richard	Cunningham, Jim (Cov'try S)
Burgon, Colin	Curtis—Thomas, Mrs Claire
Butler, Mrs Christine	Dafis, Cynog
Byers, Rt Hon Stephen	Dalyell, Tam
Campbell, Alan (Tynemouth)	Darling, Rt Hon Alistair
Campbell, Mrs Anne (C'bridge)	Darvill, Keith

Davey, Valerie (Bristol W)	Johnson, Miss Melanie (Welwyn Hatfield)
Davidson, Ian
Davies, Geraint (Croydon C)	Jones, Barry (Alyn & Deeside)
Davies, Rt Hon Ron (Caerphilly)	Jones, Helen (Warrington N)
Dean, Mrs Janet	Jones, Ms Jenny (Wolverh'ton SW)
Dewar, Rt Hon Donald
Dismore, Andrew	Jones, Jon Owen (Cardiff C)
Dobbin, Jim	Jones, Dr Lynne (Selly Oak)
Dobson, Rt Hon Frank	Jones, Martyn (Clwyd S)
Donohoe, Brian H	Keeble, Ms Sally
Doran, Frank	Keen, Ann (Brentford & Isleworth)
Dowd, Jim	Kelly, Ms Ruth
Drew, David	Kemp, Fraser
Drown, Ms Julia	Kennedy, Jane (Wavertree)
Dunwoody, Mrs Gwyneth	Khabra, Piara S
Eagle, Angela (Wallasey)	Kidney, David
Eagle, Maria (L'pool Garston)	Kilfoyle, Peter
Edwards, Huw	King, Andy (Rugby & Kenilworth)
Efford, Clive	King, Ms Oona (Bethnal Green)
Ennis, Jeff	Kingham, Ms Tess
Etherington, Bill	Kumar, Dr Ashok
Fatchett, Derek	Ladyman, Dr Stephen
Field, Rt Hon Frank	Lawrence, Ms Jackie
Fisher, Mark	Laxton, Bob
Fitzpatrick, Jim	Lepper, David
Flint, Caroline	Leslie, Christopher
Flynn, Paul	Lewis, Ivan (Bury S)
Follett, Barbara	Lewis, Terry (Worsley)
Foster, Rt Hon Derek	Linton, Martin
Foster, Michael Jabez (Hastings)	Livingstone, Ken
Fyfe, Maria	Lock, David
Galbraith, Sam	Love, Andrew
Galloway, George	McAllion, John
Gardiner, Barry	McAvoy, Thomas
Gerrard, Neil	McCabe, Steve
Gibson, Dr Ian	McCafferty, Ms Chris
Gilroy, Mrs Linda	McCartney, Ian (Makerfield)
Godman, Dr Norman A	McDonagh, Siobhain
Godsiff, Roger	Macdonald, Calum
Goggins, Paul	McDonnell, John
Griffiths, Jane (Reading E)	McGuire, Mrs Anne
Griffiths, Nigel (Edinburgh S)	McIsaac, Shona
Griffiths, Win (Bridgend)	McKenna, Mrs Rosemary
Grocott, Bruce	Mackinlay, Andrew
Gunnell, John	McNulty, Tony
Hain, Peter	Mactaggart, Fiona
Hall, Mike (Weaver Vale)	McWilliam, John
Hall, Patrick (Bedford)	Mallaber, Judy
Hamilton, Fabian (Leeds NE)	Mandelson, Rt Hon Peter
Hanson, David	Marek, Dr John
Harman, Rt Hon Ms Harriet	Marsden, Gordon (Blackpool S)
Heal, Mrs Sylvia	Marsden, Paul (Shrewsbury)
Henderson, Doug (Newcastle N)	Marshall, Jim (Leicester S)
Henderson, Ivan (Harwich)	Marshall-Andrews, Robert
Hepburn, Stephen	Martlew, Eric
Heppell, John	Meacher, Rt Hon Michael
Hesford, Stephen	Meale, Alan
Hinchliffe, David	Merron, Gillian
Hoey, Kate	Michael, Alun
Home Robertson, John	Michie, Bill (Shef'ld Heeley)
Hood, Jimmy	Milburn, Alan
Hoon, Geoffrey	Miller, Andrew
Hope, Phil	Mitchell, Austin
Hopkins, Kelvin	Moffatt, Laura
Howells, Dr Kim	Moonie, Dr Lewis
Hoyle, Lindsay	Moran, Ms Margaret
Hughes, Ms Beverley (Stretford)	Morgan, Ms Julie (Cardiff N)
Hughes, Kevin (Doncaster N)	Morgan, Rhodri (Cardiff W)
Humble, Mrs Joan	Morley, Elliot
Hurst, Alan	Morris, Ms Estelle (B'ham Yardley)
Hutton, John	Mountford, Kali
Iddon, Dr Brian	Mudie, George
Illsley, Eric	Mullin, Chris
Jackson, Ms Glenda (Hampstead)	Murphy, Denis (Wansbeck)
Jenkins, Brian	Murphy, Jim (Eastwood)
Johnson, Alan (Hull W & Hessle)	Naysmith, Dr Doug

Norris, Dan	Smith, Llew (Blaenau Gwent)
O'Brien, Bill (Normanton)	Snape, Peter
O'Hara, Eddie	Soley, Clive
O'Neill, Martin	Squire, Ms Rachel
Organ, Mrs Diana	Steinberg, Gerry
Palmer, Dr Nick	Stevenson, George
Pearson, Ian	Stewart, Ian (Eccles)
Pendry, Tom	Stinchcombe, Paul
Perham, Ms Linda	Stoate, Dr Howard
Pickthall, Colin	Strang, Rt Hon Dr Gavin
Pike, Peter L	Straw, Rt Hon Jack
Plaskitt, James	Stringer, Graham
Pollard, Kerry	Stuart, Ms Gisela
Pond, Chris	Sutcliffe, Gerry
Pope, Greg	Taylor, Rt Hon Mrs Ann (Dewsbury)
Powell, Sir Raymond
Prentice, Ms Bridget (Lewisham E)	Taylor, Ms Dari (Stockton S)
Prentice, Gordon (Pendle)	Taylor, David (NW Leics)
Primarolo, Dawn	Temple—Morris, Peter
Prosser, Gwyn	Thomas, Gareth (Clwyd W)
Purchase, Ken	Thomas, Gareth R (Harrow W)
Quin, Ms Joyce	Timms, Stephen
Quinn, Lawrie	Tipping, Paddy
Radice, Giles	Todd, Mark
Rammell, Bill	Touhig, Don
Rapson, Syd	Trickett, Jon
Raynsford, Nick	Turner, Dennis (Wolverh'ton SE)
Reed, Andrew (Loughborough)	Turner, Dr Desmond (Kemptown)
Reid, Rt Hon Dr John (Hamilton N)	Turner, Dr George (NW Norfolk)
Robinson, Geoffrey (Cov'try NW)	Twigg, Derek (Halton)
Rogers, Allan	Twigg, Stephen (Enfield)
Rooker, Jeff	Vaz, Keith
Rooney, Terry	Vis, Dr Rudi
Ross, Ernie (Dundee W)	Walley, Ms Joan
Rowlands, Ted	Wareing, Robert N
Roy, Frank	Watts, David
Ruane, Chris	White, Brian
Ruddock, Ms Joan	Whitehead, Dr Alan
Russell, Ms Christine (Chester)	Wicks, Malcolm
Ryan, Ms Joan	Wigley, Rt Hon Dafydd
Sarwar, Mohammad	Williams, Rt Hon Alan (Swansea W)
Savidge, Malcolm
Sawford, Phil	Wills, Michael
Sedgemore, Brian	Winnick, David
Shaw, Jonathan	Winterton, Ms Rosie (Doncaster C)
Sheldon, Rt Hon Robert	Wise, Audrey
Shipley, Ms Debra	Wood, Mike
Singh, Marsha	Woolas, Phil
Skinner, Dennis	Worthington, Tony
Smith, Angela (Basildon)	Wray, James
Smith, Rt Hon Chris (Islington S)	Wright, Dr Tony (Cannock)
Smith, Miss Geraldine (Morecambe & Lunesdale)
	Tellers for the Ayes:
Smith, Jacqui (Redditch)	Mr. Keith Hill and
Smith, John (Glamorgan)	Mr. David Jamieson
NOES
Ainsworth, Peter (E Surrey)	Brand, Dr Peter
Alan Richard	Brazier, Julian
Amess, David	Browning, Mrs Angela
Ancram, Rt Hon Michael	Bruce, Ian (S Dorset)
Arbuthnot, Rt Hon James	Bruce, Malcolm (Gordon)
Ashdown, Rt Hon Paddy	Burnett, John
Atkinson, David (Bour'mth E)	Burns, Simon
Atkinson, Peter (Hexham)	Burstow, Paul
Baker, Norman	Butterfill, John
Baldry, Tony	Cable, Dr Vincent
Beith, Rt Hon A J	Cash, William
Bell, Martin (Tatton)	Chapman, Sir Sydney (Chipping Barnet)
Bercow, John
Beresford, Sir Paul	Chidgey, David
Blunt, Crispin	Clappison, James
Body, Sir Richard	Clark, Rt Hon Alan (Kensington)
Bowell, Tim	Clark, Dr Michael (Rayleigh)
Brady, Graham	Clifton—Brown, Geoffrey
Brake, Tom	Collins, Tim

Colvin, Michael	Lait, Mrs Jacqui
Cormack, Sir Patrick	Lansley, Andrew
Cran, James	Leigh, Edward
Curry, Rt Hon David	Letwin, Oliver
Davey, Edward (Kingston)	Lewis, Dr Julian (New Forest E)
Davis, Rt Hon David (Haltemprice)	Lidington, David
Dorrell, Rt Hon Stephen	Lloyd, Rt Hon Sir Peter (Fareham)
Duncan, Alan	Loughton, Tim
Duncan Smith, Iain	Luff, Peter
Emery, Rt Hon Sir Peter	Lyell, Rt Hon Sir Nicholas
Evans, Nigel	MacGregor, Rt Hon John
Faber, David	MacKay, Rt Hon Andrew
Fallon, Michael	Maclean, Rt Hon David
Flight, Howard	Maclennan, Rt Hon Robert
Forth, Rt Hon Eric	McLoughlin, Patrick
Fowler, Rt Hon Sir Norman	Madel, Sir David
Fox, Dr Liam	Malins, Humfrey
Gale, Roger	Mates, Michael
Garnier, Edward	Maude, Rt Hon Francis
George, Andrew (St Ives)	May, Mrs Theresa
Gibb, Nick	Michie, Mrs Ray (Argyll & Bute)
Gill, Christopher	Moss, Malcolm
Gillan, Mrs Cheryl	Nicholls, Patrick
Goodlad, Rt Hon Sir Alastair	Norman, Archie
Gorman, Mrs Teresa	Oaten, Mark
Gorrie, Donald	Öpik, Lembit
Gray, James	Ottaway, Richard
Green, Damian	Page, Richard
Greenway, John	Paice, James
Grieve, Dominic	Pickles, Eric
Gummer, Rt Hon John	Prior, David
Hague, Rt Hon William	Redwood, Rt Hon John
Hamilton, Rt Hon Sir Archie	Rendel, David
Hammond, Philip	Robathan, Andrew
Harris, Dr Evan	Robertson, Laurence (Tewk'b'ry)
Harvey, Nick	Roe, Mrs Marion (Broxbourne)
Hawkins, Nick	Rowe, Andrew (Faversham)
Hayes, John	Ruffley, David
Heald, Oliver	Russell, Bob (Colchester)
Heath, David (Somerton & Frome)	St Aubyn, Nick
Heathcoat—Amory, Rt Hon David	Sanders, Adrian
Hogg, Rt Hon Douglas	Shephard, Rt Hon Mrs Gillian
Horam, John	Smith, Sir Robert (W Ab'd'ns)
Howard, Rt Hon Michael	Soames, Nicholas
Howarth, Gerald (Aldershot)	Spelman, Mrs Caroline
Jack, Rt Hon Michael	Spring, Richard
Jackson, Robert (Wantage)	Stanley, Rt Hon Sir John
Jenkin, Bernard	Steen, Anthony
Jones, Nigel (Cheltenham)	Stunell, Andrew
Keetch, Paul	Swayne, Desmond
Kennedy, Charles (Ross Skye)	Syms, Robert
Key, Robert	Tapsell, Sir Peter
King, Rt Hon Tom (Bridgwater)	Taylor, Ian (Esher & Walton)
Kirkbride, Miss Julie	Taylor, John M (Solihull)
Kirkwood, Archy	Taylor, Matthew (Truro)
Laing, Mrs Eleanor	Taylor, Sir Teddy

Townend, John	Widdecombe, Rt Hon Miss Ann
Tredinnick, David	Wilkinson, John
Trend, Michael	Willetts, David
Tyler, Paul	Willis, Phil
Tyrie, Andrew	Winterton, Mrs Ann (Congleton)
Viggers, Peter	Winterton, Nicholas (Macclesfield)
Walter, Robert	Woodward, Shaun
Wardle, Charles	Yeo, Tim
Webb, Steve	Young, Rt Hon Sir George
Wells, Bowen
Whitney, Sir Raymond	Tellers for the Noes:
Whittingdale, John	Mr. Stephen Day and
	Mr. Nigel Waterson.

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).